In the current economic climate, both new and experienced clients are somewhat uneasy about investing.
However, there is still abundant opportunity for investors to build wealth if they live by two key rules:
1 - continue to drip-feed new money into the markets
2 - properly diversify their portfolios
Factors such as unusual central bank policies in developed countries, economic slowdown in China and international security threats are all potential cause for concern; but even amongst the ongoing apprehensions raised by Brexit, instability unstable oil prices and unknown future of upcoming U.S. presidential elections, interest rates are still expected to soon rise.
For investors used to more consistent and greater returns, some have found these hard to come by of late and are claiming that global growth “isn’t what it used to be”, all this combined with mixed geopolitical factors that could impact the market are now being viewed as a definitive indicator.
However, this period of relatively low market volatility, fueled by contradicting statements from analysts, economists, politicians and media commentators is not necessarily the ‘calm before the storm’.
It is imperative that we not overlook the fundamentals.
In order to accumulate wealth investors must adopt an attitude which includes these two important elements:
The first of which is to continue to drip-feed new money into the markets at a steady and pre-established pace; history has shown that stocks go up over the longer-term and for clients serious about growing their wealth, they must carry on putting new money to work.
Waiting to see what will happen next is not a viable option to meet your financial goals.
Contributions to portfolios made now will allow my clients to capitalize on the potential gains of the longer-term stock market projections sooner rather than later.
Using Brexit as an example, many high quality equities are not at very attractive prices and not overvalued, so for cautious and selective investors there are plenty of buying opportunities to be found.
The second principle is to ensure that portfolios are properly diversified.
Assuming your portfolio is ‘adequately diversified’ can be a false economy as no one asset class, sector or region can be successful all the time.
In order to mitigate risk and benefit from varied opportunities, investors must spread their funds around and remember that markets work in cycles and when one asset class, sector or region is up, others are going down.
The aim is always to minimise exposure to one class, so that if that class is not performing well, the others can hold up the portfolio and keep investment objectives on track.
I have seen a number of my clients successfully grow their portfolios and increase their value even within the last few months by embracing this approach.
I will continue to hold regular review sessions to discuss how my roll-out of Augmented Services in 2017 will add value and increase wealth potential.