With many people looking as to how best to use their relevant tax allowances prior to the end of the tax year, this is the season where monies traditionally flow into Pension, ISA and other tax efficient investment portfolios.
What then of the recent increase in alarmist articles written across different media, all prophesizing various connotations of the Global Economy and stock market………? How does this impact the average person wanting to make use of such allowances and reading the popular press? Be wary of alarmist journalism and how you react to it.
The message from experts who have experienced booms and busts is: Hold Your Nerve. Investments are for the longer term. Those that are not for the longer term should not be held in markets anyway – that, of course, is nothing new. Longer term is anything five years plus, monies therefore set aside for retirement, longer term savings, umbrella funds, that sort of thing. ‘It is precisely when investors are at their most pessimistic and commentators are issuing their most dire warnings that the best buying opportunities arise’, says Brain Dennehy of Fund Expert.’ It is quite possible that things will get worse before they get better, but taking a long term view, this is a time to start buying. We are now moving into so-called ISA Season – leading up to the end of the tax year in which the highest proportion of ISA accounts are purchased – and this year we could be seeing the best opportunity for ISA investors for years’ he continues. Justin Urqhuart Stewart from Seven Investment Management says ‘there are some real fears out there. However, it is almost always a mistake to be spooked into exiting the stock market, because you will miss out on future market rises as well as valuable dividends.’
Obviously, in a perfect world, we would all buy in at the bottom, exit at the top, then wait and go in again. However, this wouldn’t be a natural market, and wouldn’t provide anyone with any opportunities to capitalise on the sometimes unfounded sentiment which can drive markets, causing irrational investor behavior.
Rather than trying to time markets, Athena believes it is for sensible to hold a spread of assets suited to the risk you are comfortable taking over the longer term. This means that you will ride out the ups and downs, and be comfortable when you sleep at night knowing your portfolio is behaving within your own agreed risk parameters. Whether you are a 2/10 and very defensive, or a 9/10 and very aggressive, or anything inbetween, the most important aspect of a portfolio is to be multi-asset and risk adjusted, just for you. This is the practice that we have always adopted with our client monies, and not surprisingly, this provides our clients with enormous comfort – it also of course means that we, as their advisers, get to sleep at night too, which has to be a good thing!
Carrie Devonshire BSc(Hons) FPFS
Director & Chartered Financial Planner
This article is considered to be general market or informational commentary and does not constitute any type of investment or other professional advice. It is not a recommendation, nor does it take into account the investment objectives, financial situations or needs (including tax) of individual clients. This document is not intended for, and should not be construed as an offer, solicitation or recommendation to buy or sell any specific financial product or instruments, or to participate in any investment or (other) strategy. You are recommended to seek advice concerning the suitability of any investment from your independent financial adviser. Investors should be aware that past performance is not an indication of future performance and the value of investments and the income derived from them may fluctuate and you may not receive back the original amount you invested.
