Getting the balance right

​”A Goal without a Plan is just a wish” (Antoine De Saint – Exupery)
So the month of February comes to an end, and as expected it followed January in the markets with all markets of interest being in positive territory for the month.

The results so far this year so underpin my comments that the dips / sell off at the end of last year do not reflect the fundamentals of the economy. Investors are starting to see sense now and are “back in the game”…raw data being (USD performance against…..)

                                    Feb                   YTD

MSCI World                +3.1%                +11.0%
S&P 500                     +3.0%                 +11.0%
FTSE                          +1.5%                  +5.1%
Nikkei                         +2.4%                  +6.9%
SSE                            +13.1%               +17.9%
MSCI EM                    +0.1%                 + 11.1%

So China was the biggest winner, with their market up a whopping 17.9% in the first two months of 2018. Yes its been a bumpy ride over there but the most populous country in the world and the world’s second largest economy has bounced back from a dreadful 2018. 

Currencies saw a mixed month for the USD. GBP is finally starting to claw its way back. Longer term, buying GBP at these very low rates is a good purchase in my opinion…raw data being

                                   Feb                     YTD

GBP                            -1.2%                  -4.0%                   
EUR                             +0.6%                +1.0%
JPY                              +2.6%                +1.9%                   
AUD                             +2.3%                 -0.7%
CNY                             -0.5%                  -2.6%

So well invested equity portfolios would have made you decent returns so far this year. All the “Greats” in investment history, Warren Buffet, Peter Lynch, Ben Graham etc have a very similar philosophy, buy well and hold. Good companies will come good, regardless of the storm that the market throws up from time to time. 

Whilst we have to heed that advice and regular readers will indeed know that I often talk about this being the key to long term sustainable growth, of course a person’s individual circumstances needs to be considered also. For working people with a 5 year plus investment horizon , having a well structured portfolio with an equity focus works. The general rule of thumb is as you get older and rely more on income from your investments, you shift from growth focused equities, into a more balanced approach and then into bonds / income producing.

There may also be cases where cash is required for a business, a property purchase etc and having equities may not work because no one can know what the value of those equities will be when you need the money. 

The investment universe is huge. There are many ways to make money but just as there many ways to lose. Having a plan is key and seeking the right guidance to help you execute that plan so you can enjoy  retirement free from any financial worries is what most people are aiming for.

Having a diversified portfolio is important  when heading towards retirement as you rely on your investments to support your lifestyle. A balance of shares, bonds and property is important. If one asset class struggles you have the comfort of not having all your “eggs in one basket”. That said being too diversified can impact on growth and be counter productive.

A couple of meetings with my clients allows me to establish what is the best path for them, how they can choose the correct plan to help them achieve their goals. There is not a one size fits all solution…

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