Diversification of investments is recommended
IAIN CAIRNS, from Argyll Financial Services, explains why diversifying your assets could be the best strategy for 2017
AS THE government begins the process of leaving the EU, this year looks likely to mark a significant watershed for the UK economy and its relationship with the rest of Europe.
On the international stage, there is considerable uncertainty about what the Trump administration will mean for business and trade, both in the US and around the world.
THE US ECONOMY
President Donald Trump wants his administration to bring jobs back to the US and will revisit trade deals the country has with a variety of international partners. Many predict he will be in for a bumpy ride, reasoning that policies that looked workable on the campaign trail may be more difficult to implement in government. However, investment pundit Warren Buffett doesn’t believe President
Trump will throw the stock market into chaos, or cause a recession. His advice is to keep the long haul in mind.
The International Monetary Fund (IMF) has raised its forecast for the UK’s growth this year, following better-thanexpected performance since the Brexit vote. It now expects the UK to grow by 1.5 per cent, compared with its previous forecast of 1.1 per cent.
With national elections in France and Germany, some see signs of a break-up of the eurozone on the horizon. If these cracks were to deepen, then there would be implications for the financial markets, the economy and business.
DIVERSITY HOLDS THE KEY
So, investors are bound to be thinking about their portfolios, and considering what they need to do to provide a degree of future-proofing for their investments. If markets look likely to experience increased volatility, then the old adage about not putting all your eggs in one basket certainly holds true.
Ensuring that your assets are diversified across a range of investments such as equities, bonds and property, in a variety of sectors, and in UK and overseas markets, makes good sense.
Many investment professionals agree that, although it doesn’t guarantee there won’t be losses, diversification is the most important component in reaching long-range financial goals, while minimising risk.
It makes sense to keep your portfolio under regular review where appropriate. This will help ensure that you are invested in the most suitable assets and that your portfolio is still in line with your investment objectives.
The value of investments can go down as well as up and you may not get back the full amount you invested.
The past is not a guide to future performance and past performance may not necessarily be repeated.