Confused? Focus on your money

IF YOU wanted to pick a weekend of maximum economic uncertainty, this one must be as good as any. There is all the Brexit stuff, of course, and that will rumble on. But this weekend adds the tussle between the US and China at the G20 meeting of dignitaries from the world’s biggest economies in Buenos Aires; concern over the Chinese economy (shares in luxury goods companies including Burberry fell sharply on Friday because of that); the oil price at its lowest for more than a year; worries about US interest rates – the list goes on and on.

Add to this that it has been a lousy year for anyone trying to build up their savings, with the FTSE 100 index down 8.7 per cent in the past 11 months, and house prices starting to fall.

As for the pound, it started the year at $1.35, had a spell in the $1.40s during the spring and is now back to $1.27, around the lowest for the year. Oh dear.

So what should we do to protect ourselves and our families’ finances?

The various forecasts for the markets next year have started to come through, with the general mood so far being that the faltering US bull market will have a last spurt.

I have not found any major institution expecting share prices to plunge, and forecasts range from Morgan Stanley thinking that prices will go sidewards, to Credit Suisse which expects them to rise by more than 10 per cent.

And the UK? Well, here there is some cheer. Credit Suisse is also reasonably optimistic about the UK, thinking share prices here will move up a bit too.

As for Morgan Stanley, it thinks that because the UK market is so cheap and unloved, there are ‘compelling reasons to be overweight’ – which, in plain English, means it thinks shares will rise.

I have two reactions to all this. One is that there is no point in trying to be too clever, and accordingly people should spread their risks. The other is that basic financial housekeeping matters massively.

On the first, there are some trusted guidelines. For example, that over any period of more than a decade, equities produce a better real return than bonds – or at least they have over the past 100 years.

Another is that the compounding effect, where you earn interest on your interest ad infinitum, is extremely powerful if you stay invested in the market over time. Another is everyone should keep something back for emergencies; and then you should have some investments abroad, in foreign funds or something similar.

The pound has been a rather weak currency over the past century and we have to assume it will continue to be so. The second point is really about common sense, too. Instead of fretting about things over which we have no control – such as Trump’s trade war – we spend a bit of time fixing things over which we do have control.

For example, it must be nuts to pay 57.6 per cent interest (or whatever) on a ‘preferred rewards’ gold credit card.

Moral: don’t be greedy, pay down debt – and don’t worry about what the Donald says to Chairman Xi over the dinner table this weekend. WHATEVER view you take of the plight of big shops vis-à-vis small ones (see Mike Ashley’s travails below), a lot more needs to be done to help high streets fight the bitter gale running through retailing.

The business rates relief scheme in the Budget was helpful but it is a patch, not a solution.

If we are to revive our high streets, and we surely must for social as much as economic reasons, we will have to roll out a string of measures.

These range from the shift of shops to housing, to boosting community use for unused buildings, to making it easier to park. And a raft of other quite small, individual actions can promptly turn around a struggling high street. For example, a successful craft shop encourages other similar enterprises to cluster close to it.

There is no single solution, no magic wand. It needs instead huge attention to detail.

There is an old adage that ‘retail is detail’. That applies to the high streets as a whole, not just to the struggling retailers that are left on them.

Spend a bit of time fixing the things where we do have control