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Mixed portfolios erring on the side of caution offer private investors best protection in troubled times

20th April 2017

In these uncertain times, many investors are concerned about the potential effect on international investment markets of a deterioration in the West’s relationship with North Korea. Such a scenario seems more likely under US President Donald Trump than under his predecessor – especially in the light of recent US bombing in Syria and in Afghanistan – and, given the current rhetoric from North Korea, investors do have some cause for concern.

But most world experts agree that all-out war is extremely unlikely. President Trump’s US administration is currently talking to China, possibly with a view to toughening-up sanctions against North Korea although, while this appears to be a positive development, investors will continue to be concerned for as long as uncertainty remains.

In the United Kingdom we remain in an age of economic austerity, with interest rates at their lowest level since the Bank of England was founded in 1694. A base rate of 0.25 per cent, reflected in the low interest rates offered on cash deposit accounts by many high street banks, produces an extremely poor return for investors and is now being further eroded by inflation at 2.6 per cent, as measured by the Retail Prices Index.

So, what are private investors to do? Ignoring high risk alternatives, private investors have two basic investment scenarios open to them. The first focusses on low-risk strategies such as holding cash or purchasing high-quality UK government debt. Buying these stocks, or gilts, offers solid security, although investors should select their individual investments carefully.

Cash deposits with high street institutions can earn interest before tax in the region of 0.65 per cent for a one-year investment or 0.75 per cent for a two-year term although, in real terms, any gains may also be eroded by inflation.

Electing to follow a medium-risk risk strategy could involve investing in a sizeable, world-class UK company that, although affected in the short term by ups-and-downs on the stock market, can reasonably be expected to produce a reliable level of income over the longer term and may also offer scope for capital growth.

Select your strategy with care. It is crucial at the outset to decide on the best mix of investments to suit every individual investor. George Ide LLP’s investment team is experienced in helping clients invest successfully so, if you would like the benefit of our professional advice, contact us on 01243 786 668 for a confidential discussion.

John Atkinson. Chartered Wealth Manager.

Business, General, George Ide, Investment, News
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