Di­ver­si­fi­ca­tion of in­vest­ments is rec­om­mended

The Oban Times - - BUSINESS -

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 UK

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.

EUROPE

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.

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