Sagicor gives advice on achieving best long-term goals

Market volatility in the global investment space is nothing new and should be expected as part of the long-term investment journey. Therefore, persons should not be overly concerned about the current environment, but instead trust that their commitment to maintaining a well-managed and diversified investment portfolio will pay dividends in the long-run.

This advice from Michael Millar, Head of Wealth Management with Sagicor Asset Management Inc (SAMI), who was speaking during a webinar recently hosted by Sagicor, entitled “Your Pension Plan: Everything you need to know in this new environment”, where local companies who currently have group pension plans managed by the regional financial institution, logged on to learn more about the options available to them as plan administrators, and the guardians of their employees’ pensions.

Millar made the point, that when it comes to securing one’s pension, investments are the most critical aspects with respect to how prudent your hard-earned money is invested, and the rate of accumulation to ensure the highest possible level of income during retirement. However, he noted that during times of uncertainty, investors can sometimes become nervous and therefore concerned about the state of their investment and the potential for financial losses instead of growth.

“When we look at the current environment, it can be categorized by one word, volatility. There continues to be stagflation (where inflation rates remain elevated), while economic growth remains lows. Supply-chain dynamics have also added to the downside risks, most notably, the geo-political risks between Russia and the Ukraine, and supply-chain disruptions, especially in the aftermath of the COVID pandemic, along with the impact of higher commodity prices,” he said.

Millar added: “This is nothing new; we have been here before. We need to remind ourselves that it is time spent in the market, as opposed to seeking to time the market that contributes to the overall long-term success of any investment strategy.”

The experienced wealth manager reminded the audience, that investments take time to deliver results, therefore, the longer an individual keeps their money in an investment, the greater the likelihood that they will achieve the positive returns they are looking for. He also mentioned that it is important to note that the size of the return would also typically be greater the longer they remain invested, thanks to the impact of compound interest.

“Pension investing usually has a long-term horizon, and it is within this context that a portfolio can generally weather short periods of volatility well. Pension fund managers should therefore seek to capitalize on the current environment by first taking advantage of solid investment opportunities that have currently cheapened up, as well as remaining invested in short maturity fixed income, thereby benefitting from a rising interest rate environment,” he explained.

Millar also pointed to the importance of diversification and loss mitigation, to ensure that exposure to any one risk is at an acceptable level, and that any underperformance from such risk, would not severely impede the fund’s long-term performance. (PR)