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 Oxfordshire).
Here at WMM in Oxfordshire, our financial planning team has received many enquiries about the prospects for the stockmarket in 2020. Almost certainly, these concerns have been driven by alarmist headlines about global recession from the UN, or worldwide debt crisis from the World Bank. These fears will have been stoked more recently by the outbreak of the COV19 virus which threatens to push countries such as Singapore into recession, and which could cost the global economy as much as £217bn in the first quarter of 2020.
Faced with stories such as these (setting the possible effects of Brexit and the U.S.-China trade war aside), it would be tempting for many investors to feel a sense of panic. At WMM, our role as financial planners is not to stoke such fears but to bring calm and perspective. Is 2020 really a year which is poised for financial disaster? Even if it is, moreover, what should the response of investors be? Let’s turn to these questions now.
If you’d like to speak to us about any of these matters, or want to book a free consultation with us regarding your own investment strategy, please get in touch via: 01869 331469.
2020 global market outlook
It’s always important to preface any comments about the future of markets with a disclaimer. No financial planner or adviser can fully predict what will happen in 2020. Few predicted the outbreak of the COV19 virus and the effect it would have on the economy, for instance. Also, few experts predicted that 2019 would exhibit strong global stock market performance. The fact is, the myriad of forces acting upon the markets are so numerous and complex it is impossible to know with certainty what will happen.
With that said, there are reasons for investors to be optimistic as well as cautious about the year ahead. The U.S. economy (which comprises almost 50% of global market capitalisation) is widely regarded as performing strongly, with low unemployment and lower costs of borrowing. The UK, moreover, faces significant challenges as it negotiates the Brexit transition period this year. Yet the economy is predicted by the International Monetary Fund (IMF) to grow at 1.4% in 2020; stronger than the Eurozone’s prediction at 1.3%.
In other words, investors in Oxfordshire and across the UK should not be blind to the challenges ahead, but the picture for 2020 is not completely bleak.
Whatever the weather, hold fast to your strategy
Regardless of what happens in 2020, it’s important to keep a long-term perspective on your investments and to commit to the strategy you agreed with your financial planner. Remember, in previous years your portfolio will have likely endured both strong and weak years of investment performance (think of the 2008 financial crisis). Yet with a properly diversified portfolio and by staying in the market, many investors have made it through such stormy years to witness increased growth over time.
Of course, it might be possible that your portfolio needs updating as it no longer reflects your investment risk profile or changed circumstances. Perhaps it was poorly constructed or diversified from the beginning, lacking other important asset-classes (e.g. bonds) or global markets which can help to shield your portfolio when a particular investment performs poorly. In any case, consider speaking to an experienced financial planner about your investment strategy for peace of mind and clarity.
If you are interested in starting a conversation about your 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.
Reach us via: 01869 331469