Protect your savings from Corbyn chaos

. . . as well as Brexit and a worldwide downturn

AS 2019 swept in to the sound of fireworks, champagne corks and Auld Lang Syne, few savers would have spent the evening wondering how to invest their nest- eggs for the months ahead.

It would have been a rather fruitless task anyway, since the year has been full of surprises.

Boris Johnson is now in No 10, and finally appears to be pushing the country towards Brexit after a seven-month delay. Whether this will involve a deal with the EU is still up for debate.

The odds of a Corbyn-led government coming to power are growing by the day – as is the probability of a global economic downturn. With a potentially even more uncertain year ahead, the Mail has asked three investment experts how you can protect you investment portfolio from...

A CORBYN-LED GOVERNMENT TOM STEVENSON, FIDELITY INTERNATIONAL

UNTIL recently, the prospect of a radical left-wing Labour government was remote. It is less of a long shot today.

Investors need to focus on Labour’s proposals because they constitute a major transformation of Britain’s economic landscape.

The scale of shadow chancellor John McDonnell’s proposals is breathtaking, and worrying for those who have benefited from the Thatcherite free-market revolution.

Proposed measures include the nationalisation of rail, utilities and mail; higher taxes on the wealthy; the forced transfer of shares in big companies to their workers; fewer incentives to own property; and massive borrowing to fund investment in infrastructure.

Pay- caps, capital controls, universal basic incomes, union power – some new concepts and even more reheated ones from the past will soon be part of the national debate.

The good news is that the realignment of British politics along Leave/Remain lines rather than the old Right/Left divide means Labour will struggle as much as the Conservatives to secure an outright parliamentary majority.

Ironically, post-Brexit politics might look a lot more European – fragile coalitions that fail to push through a radical agenda.

BREXIT

HELENA MORRISSEY ( right), LEGAL & GENERAL INVESTMENT MANAGEMENT

When newspaper headlines are screaming about the risk of recession, the falling pound, international trade wars and political mayhem it’s easy to panic and think the best thing to do is to sell shares – but history suggests that’s often the worst investment decision to take.

Take this example: investing in US stocks, even at the worst possible time before the financial crisis, would still have doubled an investor’s money over the next ten years if they had stuck it out. Selling out of your investments when you encounter a bump in the road could mean you miss out on the gains that can follow.

Another way of shielding your savings from an unexpected loss in one market and still benefit from the gains in another is through diversification. If you’re choosing investment funds, consider those with exposure to international markets, not just the UK, and mix and match different types of investment such as bonds and equities.

And if you don’t want to do this yourself, multiasset funds can do it for you by spreading your risk across different areas. If you’re still worried about investing at the ‘wrong time’, putting in just a small amount of money regularly can help limit the impact of short term market moves on your portfolio.

A GLOBAL ECONOMIC DOWNTURN JAMES NORTON, VANGUARD

The investment industry is full of experts telling us what to do. Recently there’s been a lot of talk about an upcoming recession. The hardest thing to do when everyone is providing advice on how to protect your wealth is to do nothing, but that is absolutely the right thing to do. A high-risk investor with a longterm horizon should be able to ride out short term volatility. Similarly a low-risk investor should be positioned with a good, fixed income [such as bonds] weighting so they are not exposed to the same turbulence. however, all investors should just double check to make sure they are well diversified between UK and global investments. And if returns are going to be lower going forwards keep your costs down. This can easily be done by switching your portfolio to tracker funds which are more likely to cost around 0.2pc a year. So provided your goals have remained the same and your circumstances haven’t changed, stay the course and don’t pick up any unnecessary expenses.