Don't let short-term market fluctuations derail your long-term financial plan

03 May 2023 Momentum

Financial success doesn’t come easy, and it requires discipline, planning, and a ton of good advice. But even with a well-crafted financial plan, a fluctuating global economy and endless series of national crises can make staying invested in your plan and sticking to your goals quite challenging, to say the least.

The 2022 Momentum UNISA Household Financial Wellness Index revealed that rising consumer price inflation, interest rate hikes, and high unemployment, made achieving financial goals significantly more difficult for South African households in 2021.

According to Hugo Bezuidenhout, Distribution Enablement Manager for Momentum Financial Planning, amid economic storms, it is too easy to lose sight of your financial goals. “In financially tough times, you have to know that now is the time to focus your attention on the things that matter most. Sticking to your goals is more important than ever because you never know what is coming around the corner. And without a plan, your goals will likely remain out of reach.”

Bezuidenhout says economic uncertainty is unavoidable. However, he says having a solid financial plan can help mitigate the effects of market swings and other unexpected events. It's crucial to stay the course during market volatility. According to him, the worst thing you can do is panic and make impulsive decisions based on short-term fluctuations. He says you need to have a long-term perspective and remember why you set your financial goals in the first place.

“Being very disciplined when it comes to spending and savings is one of the most important money moves you can make during difficult financial times. Stick to your budget, and continue to put money away for your retirement, even if it means tightening your belt in the short term. It's also important to review your investment portfolio regularly and adjust as needed to ensure that it aligns with your long-term goals,” Bezuidenhout says.

He says a solid emergency savings fund is another critical factor in staying on track with your financial goals. “This should cover at least three to six months' worth of expenses in case of unexpected job loss, medical expenses, or other unforeseen events. This cushion can help you weather economic turmoil without having to dip into your long-term savings.”

Bezuidenhout says staying informed about what’s happening in the economy and how it may affect your financial situation is essential. It is equally important to keep things in perspective and not let short-term market fluctuations dictate your long-term financial plan.

“This is where having a financial adviser can be incredibly valuable. A good financial adviser can help you stay focused on your long-term goals. They can help you navigate the noise in the financial world and provide valuable insights into market movements,” he says.

No matter what is happening in the world, the importance of sticking to your financial goals during economic turbulence cannot be overstated. “By staying disciplined, having a solid emergency fund, and getting the right advice, you can weather economic uncertainties and emerge stronger on your journey to financial success,” Bezuidenhout concludes.

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