When it comes to investment we are still living in interesting times. With so many unexpected global events in recent years and those that are ongoing, investing has not been a great deal of fun of late, and I fully appreciate the frustration of clients, of all investors.
This article is designed to provide some context and comfort. So read on…
Any investment should be for the long-term, and you need to hang on in there and ride out markets. There are no real losses unless an investment is sold and history tells us that what matters is time in the market.
This previous article on markets remains valid. Sitting tight – the importance of remaining invested
The world has been volatile, equity investments have been adversely affected by events, inflation and rising interest rates, but these are all fairly short-term issues in the grand scale of things.
I have seen a few people stating that US markets are up this year and so are worried that their investments are underperforming but the situation is not as it may first seem.
It may look as if the US S&P 500 is in a positive situation year to date but that growth is largely due to just a handful stocks and is not a real reflection of actual investment returns. The current level is very close to where it stood a year ago.
Some AI euphoria put the Standard & Poor’s 500 Index into the technical definition of a new bull market, having rallied by more than 20% since last October, but this is an incredibly concentrated bull market.
While the S&P 500 has risen by 13% this year, once you strip out information technology the return is only a meagre 2% and it was negative until a few weeks ago.
If you are invested in another currency, Sterling or Euros, factor in the conversion and it is all pretty much flat.
UK stock markets are also struggling due to multiple factors. There are worries over interest rate increases as a result of higher-than-expected inflation, and the threat of a US debt default. Markets hate uncertainty. Bear in mind that many companies in the FTSE 100 Index trade globally so are affected by more than just local reasons.
The reality is that over time, stock markets produce above inflation returns and that is what we need to focus on.
This table shows the returns from a number of markets over an extended period but it is important to note that this does not include dividends. Adding in dividends increases returns.
This is not a situation that will last forever but stock markets are affected by a number of global issues. You should really only invest for the medium to long term so, provided you are properly invested, you just need to hang on.
Your main concern should be that your investment increases in value over years. The short-term volatility is not something to worry about. When I manage your investment portfolios, what I aim for is a return that is at or above sector averages. The focus is on relative returns. A sensible and diversified portfolio is what is needed, based on your preferred level of risk, and that works over time.
Over 25 years of managing investments means that I know this to be true.
Markets are not easy, but we will see real positives at some point. Your patience will pay off.
This is a good time to invest for the long-term, when equities are down or flat, as we know there will be an uptick in the future and then you stand to benefit. Many stocks are trading at historic discounts and that bodes well for future growth.
The investment options for GCC expats are better than they have ever been and you can look at flexible offshore investments with no exit penalties, no lock-ins, a huge range of funds, tax efficiency, plus expert management.
Quick overview The future of investing is… flexible
If you prefer to invest in UK property, I can help with that too. See HERE
If you have investments that are not being managed at this level by your current adviser, feel free to get in touch as I will often take over the servicing and management of plans and get them on the right track.
My many years of experience, qualifications, and know-how means I am a safe pair of hands when managing investments.
I deal with serious topics in a friendly and relaxed manner.
To arrange a discussion about investing, or on any aspect of your personal financial planning, please email me at email@example.com I run my own set-up under the Holborn Assets umbrella.
I write articles such as this one as part of the holistic personal financial planning service and that I provide to expats, and the general consumer, financial and legal information that I provide in The National newspaper, other UAE publications, and in the Facebook group British Expats Dubai.
Please take a look at the other useful articles on this website.
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