Monthly Archives

May 2020

Let the Markets do the heavy lifting

By | Investment Planning, News

If you didn’t know better you may assume, probably because of constant media noise, that Stock markets globally have virtually ceased trading, and just given up. Actually, they haven’t and many of our clients have seen really good market recoveries lately. That clients have listened to and accepted the logic behind our investment philosophy is extremely reassuring to us. It has meant sitting tight, taking advantage of recent downturns, knowing that ‘this too shall pass’.

We are acutely aware that many investors will not have experienced the levels of recent volatility, however, I personally have been through around 7 of these ‘Black Swan’ events so feel confident we know what works to get people and families through the times. It really resonated with me when new National Treasure, Colonel Tom Moore said: “For all those people who are finding it difficult at the moment: the sun will shine on you again and the clouds will go away,”. Captain Tom may not know all the academic research behind key investment principles, like the one below about letting Markets work for you, but I couldn’t have put it better myself. He’s been around you know!


Let the markets do the heavy lifting

In investing, there are two main sources of potential returns. The first is the return that comes from the markets and the second is the return generated through an investor’s skill. At its simplest, there are two main ways in which an investor can try to deliver a better return than the market return; time when to be in or out of the markets (known as market timing, tactical asset allocation or sometimes a ‘top-down’ approach), or to pick individual stocks (known as stock picking, security selection or sometimes as a ‘bottom-up’ approach). This gives us the four main combinations of strategies set out in the figure below.

Figure 1: Four main strategies exist – they are not equal in effectiveness

Trying to beat the market – through either market timing or stock picking – is a tough game, with very few winners, and in our view is not a game worth playing. That positions our own approach in the bottom right quadrant, where we and other sophisticated investors use the information in the empirical evidence to employ an approach with the greatest chance of delivering a successful outcome. We avoid trying to market time or pick stocks. We just let the markets do the heavy lifting.

Letting the markets do the heavy lifting on returns will take a great weight off your shoulders; you no longer need to worry about picking the right stock, the right manager or deciding if you should be in or out of the markets. We are always happy to chat about some of the overwhelming empirical evidence in support of our approach, so if you feel you want to know more then call us on 01869 331469.


How to battle investment fear & bias

By | Investment Planning

As we write this, the global markets are still in a period of great uncertainty. Even as European nations tentatively begin reopening their schools and business, COVID-19 still hangs over the economy and stock exchanges. Many investors, already bruised from 30% market falls in the first quarter of 2020, are looking ahead with trepidation, wondering if things will get better. If they do not, moreover, how can an investor muster the mental fortitude to stay true to the investment strategy they agreed with their financial adviser?

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Investment strategy in a volatile market

By | Investment Planning

It’s often hard enough to stay true to the investment strategy agreed with your financial adviser during “good times” in the market. When the economy is unstable and markets are fluctuating, however, holding course is usually even more difficult. The temptation to withdraw from falling stocks, jump onto rising ones or redistribute your asset allocation can be very strong – especially if following the media or if you believe others around you are doing so.

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Is the state pension triple lock safe in 2020?

By | Pensions

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxford).

If you’ve been following the financial news in May 2020, you’ll likely have noticed the headlines about the state pension triple lock. Our financial planning team here in Oxford have certainly had plenty of enquires about this. In summary, most questions were about whether the “triple lock” can be sustained following the huge increase in government spending from March 2020.

In this article, we will be examining the likelihood of this change and the possible implications. We hope you find value in this content. Get in touch to join our mailing list for the latest updates, or request a free consultation if you’d like to discuss your own retirement planning needs with a member of our team: 01869 331469.


The triple lock & COVID-19

For those unfamiliar with the triple lock system, it was introduced in 2010-11 to ensure that state pension payments rose by 2.5% per year to keep up with the rising cost of living. In 2020-21, for instance, the new full state pension rose to £175.20 per week – up from £168.60 in the prior financial year. However, there are noises from the government that they could announce a suspension or abolition in the triple lock.

The reasoning behind this speculation appears to be linked directly to COVID-19. The March 2020 budget to combat the pandemic announced £30bn in extra spending (added to £18bn of other spending pledges). This has been called the biggest budget “giveaway” since 1992, and is estimated to add another £100bn in public debt over the next four years. As such, the government is now looking for ways to save money and bring stability to the economy. Stopping the “rising cost” of the triple lock could save £8bn a year and £20bn over five years; hence its focus at this time.


Likelihood & financial planning implications

This is obviously concerning to those currently relying on their state pension for an income in retirement, or those who plans depend on it. Whilst our Oxford financial planning team cannot predict the future, it is worth noting that the Conservatives tried to abolish the triple lock ahead of the 2017 general election, but changed course to secure power with the Democratic Unionist Party (DUP). This time, the government has an 80-seat majority and strong incentive to rein in areas of public spending. Time will tell, of course, whether or not the triple lock will be axed in 2020.

The possible implications for financial planning are what concern us here. It’s worth noting that, had the triple lock not been established in 2010, then pensioners today would be getting about £10 less per week (i.e. £525 per year). As such, if the triple lock is indeed suspended or axed, then it will be necessary for many people to revisit their financial plan. For some already in retirement, they might need to accept a slightly lower income each year. Others yet to reach State Pension Age might need to increase their workplace or personal pension contributions to try and make up for some of the shortfalls. Indeed, in certain cases this might mean reassessing your planned date of retirement, to give more time to build up your pot and national insurance record. However, here at WMM, we aim to help you find realistic ways to achieve your retirement goals. Do get in touch if you are in Oxfordshire and are concerned.



If you are interested in starting a conversation about your own financial plan, then we’d love to hear from you. Get in touch today to arrange a free, no-commitment consultation with a member of our friendly team here at WMM.

Call us on : 01869 331469