September 2024
- This month will probably see interest rates coming down in America. GDP growth in the US is at an astonishing 3% compared to 0.6% in the UK and 0.7% in China. So, even though interest rates will come down in the US, their economy is astonishingly robust.
- In the UK financial eyes are focused on the budget, but eyes are also on the next meeting of the MPC, the body of people that decide on our interest rate policy. Our new chancellor is likely to raise taxes across the board making life more difficult for all of us. Will the MPC help our chancellor by reducing interest rates? We will have to wait and see.
- Most international equity markets are all doing well, and most bond markets are doing well too. Interestingly, commodities are suffering but gold continues to do well. As interest rates decline, the dollar weakens, and geopolitical tensions are still high, especially in Gaza.
- A new online webinar is being released soon and the content will focus on the up-and-coming budget and what to do in preparation for what may happen. Look out for this, I hope you will find it interesting.
- As implied above China’s economy continues to be in deep trouble, so it is good we continue to avoid any direct investment in this jurisdiction.
- The fixed interest market is still offering good opportunities for investors and this year has the potential to make up for some of the lost ground over the last two years. I notice the yield on a UK 10-year Gilt bond is now under 4%, this is particularly good news as our portfolios hold this type of investment
- What are we getting right:
- Staying away from direct investments in China.
- Selling low and buying low.
- Getting into Japan early (at least a year ago the rest are only just catching up).
- Invested in Tech and staying with the US in general.
- Not selling off our Fixed Interest exposure and watching their value return.
- Watching out for cash accounts and short-dated bonds ceasing to offer attractive levels of return and what to do when this happens.
- What did we get wrong:
- Investments in Infrastructure and we took too long to move away from Agriculture; however, these areas are being corrected.
- Our portfolios are holding up well because:
- Investing in underlying assets directly i.e., government gilts and high-quality corporate bonds.
- We continue to look out for structured products to place in our portfolios because by doing so introduces a certainty ingredient. However, they are not offering the risk-free returns they were.
- Our portfolios use fixed interest and fixed interest investments suffer when interest rates are high and there is more supply – this affects their value negatively. It should be remembered however, with fixed interest, you get your money back at maturity (which is not the case with other investments), so it’s a matter of holding these investments until interest rates start to come down or the investment matures.
Please note that:
- This information in isolation is not financial advice.
- Past Performance of investments is not to be relied on and the value and the income from investments can go up as well as down.
- It is advisable to regularly review your investments.
