This has been a test – developing a FP you can stick with

This Has Been a Test: Developing a Financial Plan You Can Stick With

The virtues of having a financial plan that was sensible to stick with have never been more evident than over the past 3 years. The pandemic, resurgent inflation and Russia’s invasion of Ukraine are just three of the major events investors have had to contend with, alongside major climate related disasters and the spectacular rise and fall of cryptocurrencies.

Think back to December 2019. The economy was humming. Unemployment, interest rates, and inflation were at historically low levels. But then what happened?

• A global pandemic hit. By the end of March, the S&P 500 had dropped nearly 20% in ¹
• Later in the year, scientists announced that they’d developed a vaccine, and markets roared back.
• FAANG stocks soared … before giving up a lot of ²
• Meme stocks shot way up … and fell back
• Bitcoin and other cryptocurrencies reached record highs … and then crashed.
• Inflation spiked to the highest levels most of us have ever experienced.³
• And Russia invaded Ukraine, sparking a humanitarian crisis and geopolitical

We don’t know anyone who predicted all of that back in December 2019. But what if someone had? What would you have done?

Next question:  What if that person told you that, despite all that bad news, the Australian share market has still returned over 7% a year over the last 5 years?⁴

The global share market averaged returns of over 9% a year for the same period⁵. Would you have believed them? Would you have stayed in the market?

Because that’s what happened.

The conclusion we hope you reach is that it’s unrealistic to think you can outguess markets. You’re probably better off expecting that markets do their job of capturing the human ingenuity taking place every day across thousands of publicly traded companies around the world.

What do we mean by markets doing their job? When news of the pandemic hit, markets adjusted, and prices went down. In other words, when uncertainty peaked around March 2020, investors demanded a higher return to jump into the market. Then, when news of a vaccine spread, the market adjusted its expectations accordingly. In the short term, there are often wild swings up or down. Making a change during either can be dangerous.

The past three years were a good test of whether or not you had an investment plan that was sensible to stick with. So take a moment to think about why you did what you did, and prepare for next time. Because the next three years may be just as uncertain.

First, make sure your investment plan is sensible and based on financial science. Second, make sure it’s realistic for you and your own unique situation. Even the greatest plan is no good if you can’t stick with it during tough times. Invest in markets in whatever asset mix is right for you. If you’re not sure, talk with a financial adviser like Calibre Private Wealth Advisers who can help you.

We don’t make predictions, but we do believe in the power of human ingenuity to fix problems big and small, innovating the whole way. What has stayed constant throughout our lives is the power of people to make progress in the face of challenges.

We’ve seen it in the fight against COVID-19, where vaccines developed at lightning speed are now being administered around the world. We’ve seen it in the continued progress of gene therapy, which is revolutionizing the treatment of multiple diseases. So, as we start 2023, let’s remember the lessons of the past three years. Let’s develop—and stick to—plans that take us through the short-term ups and downs of market fluctuations so we can capture the long-term benefits of human ingenuity.

1. S&P data © 2022 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Indices are not available for direct investment. Index returns are not representative of actual portfolios and do not reflect costs and fees associated with an actual Decrease of 19.6% was from Jan. 1, 2020–March 31, 2020.
2. Facebook-parent Meta, Amazon, Apple, Netflix, and Google-parent
3. Gwynn Guilford, “U.S. Inflation Hit 7% in December, Fastest Pace Since 1982,” Wall Street Journal, January 12,
4. S&P/ASX 300 Index (Total Return). S&P data © 2023 S&P Dow Jones Indices LLC,
5. MSCI World ex Australia Index (net div., AUD). S&P data © 2023 S&P Dow Jones Indices LLC,

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Calibre Private Wealth Advisers provides financial leadership and peace of mind for successful professional, business owners and their families.

We engage our clients in real conversations around their life and then help them use the money they have to get the best Return on Life

If you have any questions/thoughts in relation to this article or have a need for some advice and would like to discuss your particular situation, please contact Gordon Thoms or David Conte at Calibre Private Wealth Advisers on ph. (03) 9824 2777 or email us here.

The information contained in this article is of a general nature only and may not take into account your particular objectives, financial situation or needs. Accordingly, the information should not be used, relied upon or treated as a substitute for personal financial advice. While all care has been taken in the preparation of this article, no warranty is given in respect of the information provided and accordingly, neither Calibre Private Wealth Advisers, its employees or agents shall be liable for any loss (howsoever arising) with respect to decisions or actions taken as a result of you acting upon such information.