MONEY MATTERS: You’re poorer today than you were yesterday

I am currently sailing around Croatia; fortunately, the weather is kind and at odds with the gathering financial storm clouds that await the unwary.

All of the major developed economies are engaged in competitive devaluation, all trying to get an “edge” by reducing the value of their Fiat currencies. They achieve this in a variety of ways, including printing more money.

We are not primarily involved in a global trade war as mentioned in the media but in both a trade and currency war.

The end result is that the pound in your pocket will not go as far as it used to, and if like many investors you hold large amounts of cash – then your monies’ worth is being reduced and degraded by these events.

Stock markets are becoming increasingly volatile as many believe that we are on the cusp of a recession, a slump, a downturn, a collapse – the next six months is looking particularly grim.

As these fairly dramatic changes are going to be highly inflationary, then you may be able to guess what investment actions to take.

In the midst of this chaos, we have the European Union and the UK involved in an economic stand-off, pure madness for both. The short-term effects of any break will be bleak for the UK economy.

The longer-term effects for the EU may turn out to prove more profound, with many commentators predicting the collapse of the Euro and the end of the European dream.

The European Union’s financial stability is being propped up by the International Monetary Fund (IMF) as most of the loans from the IMF end up supporting European banks and projects.

The European banking system is in a mess; loans made to another European country are completely ignored, their balance sheets – which look weak anyway – are propped up by delusion.

The Chinese economy is in trouble also with increasing levels of debt defaults and a trade war with Donald Trump, the true nature of the depth and intensity of the trading disputes between China and the USA is often glossed over.

In times like this, investors really need to get a grip on their investments and ring the changes necessary to protect their wealth.

We are in the process of posting an investment alert to our private clients, informing them of how best to re-balance their portfolios for the months ahead.

I find it somewhat odd that new clients who have been stuck in an under-performing pension portfolio for years and did not have a clue about how their funds were performing, change when they make the switch to real “participatory” investing and engage in the investment process; they suddenly begin to question everything.

It is almost as though they are in shock, and perhaps would prefer to have continued to be treated as a mushroom.

We provide an educational process so that clients understand how our proactive investment service works. That normally requires several meetings with new clients in the first year of being a client. That normally works quite well.

This service is not for everyone; clients must have advisable assets of at least £500,000 and must seriously want to increase their wealth over the years ahead.

Occasionally we will accept clients with lesser amounts, depending on the personality of the client.

Our service includes recommendations for investment trusts, one of our recommendations came up trumps recently, not only as one of the top-performing investment trusts but with outstanding Sharpe ratios, too.

We also have relatively cheap access to Discretionary Fund managers.

So often clients end up with a mixture of Discretionary, Advisory portfolios, others prefer entirely Bespoke investment advice.

If you would like a second opinion on your portfolio (and don’t want to be treated as a mushroom) call Ruth on 0118 934 7921.

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Ray Best
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