by Nick Stewart

If you have ever heard of the hero’s journey, you’ll know that a good story is never rushed. Consider cult classics like the first Star Wars trio, in antiquity Homer’s Iliad, or modern-day feats of technology like James Cameron’s Avatar. The heroes follow a path. They get the call to adventure, they answer the call, there’s a whole lot of action in the middle. At some point, it looks like all is lost… except our heroes keep pushing, and it all comes together beautifully for a triumphant finish.

This takes time, discipline, and help from external parties who aid the hero or provide the skill they lack.

Take a note out of Hollywood’s book and consider the phases of your journey. You (the hero of your story) must go through unique trials and tribulations along the way – such is life.

We’re seeing trials now. New Zealand is now officially in recession with gross domestic product (GDP) having dropped 0.8% over the December and March quarters.  Furthermore, the nation's deficit is at $33b or 8.5% of GDP.[i] [ii]  Exacerbated by a series of one-off weather events causing varying degrees of damage to different areas, the reality of the situation is that New Zealand has spent beyond our means as a country and the already-tight belt will likely feel even tighter as a result.[iii]

It can feel difficult to forward-plan when you are stuck in a seemingly never-ending vortex of unprecedented times, rate rises, and inflationary pressure.

The all-is-lost moment is the darkest hour before dawn. It’s when there seems to be no place to turn and no way to redeem what has been lost.

Our fictional heroes always find a way through in the end, and so can you.

The Global Financial Crisis of 2008 felt like an all-is-lost moment to many investors. For those who panicked and pulled their money, it may well have been. They crystallised what had until then been paper losses, pushing themselves backward on their financial journey. If they had held their nerve and continued with their plan, they would have been well-placed to capture returns when the markets inevitably returned to the mean.

Remember – a good story takes time to unfold. While we might want to hurry up and resolve things neatly, life (and art) doesn’t work like that. There’s a process to recovering from the lows and getting back to the ‘normal life’ phase on the other side of the hero’s journey hill.

A well-constructed financial plan will make allowances for periods like the present. The right plan will help you see past the daily news headlines so you can stick it out to get to the good times on the other side. Uncertainty is a constant. But if there were no uncertainty, there would be no return. And while the good times don’t last forever, neither do the bad.

A good, solid plan should not keep you on the edge of your seat with your heart racing coupled with a shot of cortisol. There shouldn’t be any big plot twists blindsiding you. Some risk is inherent to investing, but that risk should always be a.) at a level you are comfortable with and b.) in proportion to your timeframe. Evidence shows that time can cushion the highs and lows of markets – if your goal is 20 years away, your risk tolerance could be higher than someone with a goal five years away.

Your call to adventure could be as easy as sitting down with a trusted financial adviser for a chat about your financial future. Though, with a robust, well-diversified portfolio it should feel more like the call to watch paint dry…

Best to leave the more hair-raising stuff in fiction – and the financial planning in the capable hands of a trusted fiduciary with your best interest in mind.

·         Nick Stewart (Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha) is a Financial Adviser and CEO at Stewart Group, a Hawke's Bay-based CEFEX & BCorp certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions. Article no. 310.

·         The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

[i] https://businessdesk.co.nz/article/economy/nz-economy-dips-its-toe-into-recessionary-waters

[ii] https://www.stats.govt.nz/news/annual-current-account-deficit-33-0-billion#:~:text=The%20annual%20current%20account%20deficit,year%20ended%2031%20December%202022.

[iii] https://www.imf.org/en/News/Articles/2023/06/13/new-zealand-staff-concluding-statement-of-the-2023-article-iv-mission#:~:text=The%20external%20balance%20has%20deteriorated,factors%20that%20favored%20durable%20goods