A truly brutal week – but patience pays (in the end)

WHAT A week. What a brutal working week. As a money commentator for more than 30 years standing, as disheartening as times go – on a par with

Black Monday (October 1987); the beginning of the end for Northern Rock (2007) and the heralding of the financial crisis; and, of course, the horrific events of September 11, 2001 (images I will never forget as long as I live).

Indeed, Rishi Sunak’s rousing Budget speech, as he sought to stop the economy falling head first into recession, now seems an almost distant memory.

Thursday’s calamitous fall in stock markets – the biggest since Black Monday – saw to that, wiping away most of my recall of Sunak’s impressive tub-thumping performance (surely, a Prime Minister in waiting).

Friday’s bounce-back in markets put a bit of gloss on an otherwise awful five days. Grateful for small mercies? Absolutely. I’ll take any glimmer of good news going.

As far as readers’ personal finances are concerned, the Budget was something of a non-event – and understandably so. It was overtaken by the Government’s overwhelming need to come up with a battle plan to ensure good businesses do not flounder, or go bust, as a result of the economic disruption caused by coronavirus.

And, of course, to provide a degree of financial protection to those impacted by the virus and who are unable to work. Sunak was not found wanting, although it remains to be seen whether it will be enough (I fear not).

Probably, the ‘bigger’ personal finance event of the week

(share price slides, notwithstanding) was the Bank of England’s decision to take an axe to interest rates. As my colleagues report opposite, it means yet more misery for those dependent on cash savings to supplement their income. How some banks and building societies will respond to this will be interesting given they have already pared back rates to the bone (0.05 per cent).

As for homeowners whose mortgage is soon coming up for renewal, or who are paying over the odds by sitting on a standard variable home loan rate, I would suggest that you now start looking for a fixed rate loan (three or five years). A good broker such as L&C Mortgages can do the hard work for you. It will then allow you to budget with a degree of security over the difficult months ahead – especially if Sunak has no choice in the autumn but to jack up personal taxes to shore up the Government’s finances, depleted by coronavirus and the stock market’s plunge.

As for the market, nobody knows where it will go from here. But it is unlikely that the dramatic gyrations of the past few weeks will go away until we can all see a light at the end of the coronavirus tunnel.

My advice to readers with share portfolios, Isas and selfinvested personal pensions is to sit tight – and to continue investing if they have monthly investment plans in place. We survived 1987 and the 2008 financial crisis and at some stage the stock market will start looking beyond coronavirus. When? Nobody knows. But patient, long-term investing will win through in the end.

IT SEEMS incredible that nine months after investment project Woodford started to fall apart at the seams, the City regulator has yet to reprimand fund manager Neil Woodford for his actions. Maybe, it hopes that time will act as a healer and commentators like me will turn their attention (and venom) to other matters of financial importance.

Maybe it believes that investors caught up in the scandal will be comforted by the payments they are receiving from the protracted dismembering of flagship fund Woodford Equity Income – and move on, content to have got something back from their dance with the equivalent of the investment devil.

Maybe, maybe. But wrong, wrong. The Financial Conduct Authority must stick up for investors (those people whose financial interests it is meant to protect) and demonstrate that the likes of Woodford cannot ride roughshod over everyone and everything. To do anything less is negligence in the first degree.