Keep your nerve

THERE is no denying it has been a brutal couple of weeks for investors.

Panic over coronavirus has badly shaken the world’s financial markets, culminating, on Monday, in the FTSE 100 suffering its sharpest one-day fall since the height of the 2008 crash.

With City traders saying, ‘It’s utter carnage out there’, it is understandably hard for even the most experienced investors to see beyond the plummeting lines on graphs and red minus numbers.

But while it is entirely reasonable to feel worried about your nest egg or pension, it is vital to try to think in terms of years (or even decades, if you are relatively young) rather than the next few days.

When this crisis ends, experts are hopeful shares will bounce back. But if you sell now, all you are doing is turning a loss on a computer screen into a cash one.

As Money Mail’s former Prudent Investor Tony Hazell explained last week, history has proven time and again that in moments of stockmarket turmoil, it pays to sit on your hands and do very little. No good ever comes from making rash decisions based on panic — and investing is no different.

The markets are also changing too fast for us to keep up. And it is incredibly difficult for small investors to time trades.

For example, if you had pulled the trigger on a request to sell an investment on Friday, it’s very possible that the sale would not have gone through until Monday, by which point you would have suffered a far greater loss. You would have then had to watch as share prices recovered slightly yesterday morning.

So even if you think you know which way an investment is going to go, you can still get it wrong. However, if you hold your nerve, you have every chance of riding out the coronavirus crisis in better shape.

If you don’t believe me, take comfort in this reassuring statistic. If you had invested £10,000 in the FTSE 100 back in 1985 and reinvested dividends, your pot would now be worth £156,547 despite the crash of 1987, the financial crisis and this month’s plight. Hopefully, in time we will look back on this nasty period as just another bump on a very long investment journey.

Insurer turmoil

IN THE short term, many of us may be more worried about our holidays than our investments.

Families who have been looking forward to Easter getaways for months have a million and one questions — none of which seem to have straightforward answers.

Similarly, with wedding season fast approaching, couples who have spent thousands of pounds on their big day are now facing enormous uncertainty.

So concerned are the specialist insurers that offer wedding cover that many have now suspended the sale of policies altogether.

Industry trade body, the Association of British Insurers (ABI), must intervene to ensure customers have some clarity over where they stand should their holiday or wedding plans fall apart.

There are a host of small-print exclusions which no one dreamt would ever affect them.

We can only hope insurers take the same sympathetic approach to claims as many eventually did during the Icelandic volcanic ash cloud disruption in 2010, even if customers were not technically covered for natural disasters.

Budget magic

All eyes are on new Chancellor Rishi Sunak as he prepares to deliver his first Budget (and the first in 500 days) today.

With the coronavirus crisis in full swing, Mr Sunak is unlikely to be too gung-ho when it comes to major policy changes.

But Money Mail remains hopeful he has at least one cheap and cheery rabbit in the red box.

An easy win would be a pledge to help more than one million lowincome savers who currently miss out on vital pension tax relief.

Over to you, Chancellor ...