In only a few short days, we have entered into the unknown. Government measures have brought immense changes to our daily lives, with social distancing, school closures upending our sense of normality. This week, over 1.5 million vulnerable people are being told to self-isolate for 12 weeks, and the government has suggested it may enforce broader lockdown measures. These are unprecedented and difficult times, with many of us facing extraordinary challenges and lacking any clear indication of when things may improve.
The Coronavirus Job Retention Scheme revealed on Friday evening will go down in history as the greatest state intervention ever seen in peacetime, surpassing Clement Attlee in 1945 and Gordon Brown and Alistair Darling in 2008.
For a number of investors, current market activity is prompting discussions about reviewing investment portfolios and even moving into cash. But while your portfolio may benefit from some healthy rebalancing right now, locking-in losses and moving your money into ‘safer’ assets could put a significant dent in your long-term gains.
The return on cash has been woeful for years, meaning that savings accounts have largely struggled to keep pace with inflation. Savers now face yet another round of interest rate cuts after the Bank of England slashed the base rate from 0.25% to 0.1% last week – the lowest level in history.
No one knows how events will play out, or how markets will react. What we do know is that whether the next move for markets is up or down, it shouldn’t matter to longer term investors who have the patience to ride out the peaks and troughs.
In challenging times, long-term financial planning might seem less of an obvious immediate priority. However, it is worthwhile looking beyond the next few weeks and months and considering that actions you take now can make a significant difference to your future financial security or that of someone important to you.
Most of all, stay healthy and take care of your family.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may therefore fall as well as rise. You may get back less than you invested.
An investment in equities does not provide the security of capital associated with a deposit account with a bank or building society.
In The Picture
Azad Zangana, Senior European Economist and Strategist at Schroders, explains what the Bank of England’s latest rate cut means for businesses, and outlines his expectations for UK GDP in the months ahead.
The Last Word
Be aware that the market does not turn when it sees light at the end of the tunnel. It turns when all looks black, but just a subtle shade less black than the day before.
Jeremy Grantham, co-founder of GMO, March 2009.
Oaktree, Schroders, AXA and Artemis are fund managers for St. James’s Place.
The information contained is correct as at the date of the article. The information contained does not constitute investment advice and is not intended to state, indicate or imply that current or past results are indicative of future results or expectations. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.
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