Well, having spent the past 4 months or so at home, I’m sure that many students will not feel like greeting the Summer holiday period in the same way as previous years, but here we are, just back up and running and straight into the holiday season!
Looking at the economic backdrop, the devil is often in the detail and whilst certain emotive subject matter is very much at the forefront of media reporting just now, I have dug below the ‘window-dressing’ to see what is really going on behind the scenes and I have to say that some of it doesn’t make for good viewing, with rule changes being driven through not only within property planning circles but also in terms of our legal process…a worrying trend!
As we are now starting to see the outfall of the impact of the virus on jobs and businesses as a whole, it is worth noting that the investment markets have already factored expectations on this front into their valuations and so the sharemarkets are not looking particularly negative right now, in fact it was the reverse last week, as there was good news to come with European manufacturing output levels increasing again.
There is no doubt that the virus continues to ravage certain countries, not least the US and a vaccine is the obvious solution to returning our lives to a semblance of normality, but there is positive news on several fronts around the globe and I am sure that we will see a working vaccine out there by the early part of next year, if not the latter part of this year and then it will be ‘hang on to your hats’ time for sharemarket valuations!
Within the UK, there is increasing speculation that interest rates (currently set at 0.1%) may even move to a negative basis in order to assist the heavily indebted business sector and, whilst this is not at all good for deposit investors like yourselves (a lot of fixed rate deposits have now been withdrawn from the market altogether, leaving some interest rates as low as 0.01%, or £10 a year for a £100,000 deposit), the priority remains to stimulate the business economy in the best or only ways possible, given the difficult trading climate we still find ourselves in.
The government are shortly to announce their plan to attract further investment via the use of their investment institution, National Savings and Investments (NS&I) and given that they presently have amongst the most attractive deposit interest rates available, I am not sure that much will change, but it is worth keeping an eye on.
Balanced investment across all sectors remains the most suitable strategy for now, given that absolute safety will see your savings fall behind the rate of inflation anyway, but as I have said so often, minimise the risk wherever possible and I am here if you need a chat on this or any other fronts at any time!