Investing in Uncertain Times

Cash for comfort

Despite the record low returns on offer, cash still has an important part to play as the right home for money that might be needed in the short term.  Holding sufficient funds in cash also avoids the need to sell long term investments at a bad time, such as after a sudden fall in market values, something investors need to remain wary of in the months and years to come as economic and political uncertainty looks set to continue.  How much cash to keep on standby depends on each individual’s circumstances and attitude to risk.

The long view

It’s important to remember that future financial needs will only be met by taking a long-term view of investment strategy.  It is impossible to second guess the markets in the short term, so making hasty decisions based on rapidly changing market fluctuations is a risky strategy.

Diversify your investments

It would be equally unwise to put all investment eggs into one basket, particularly in a time of such uncertainty.  Diversifying a portfolio provides investors a way that helps to protect their money and search for better returns.

Tax

Taxes can create a drag on investment returns over the longer term, and can also have a potentially devastating effect on the value of wealth passed down to future generations.  There are some easy ways to tackle this, such as making full use of the annual tax allowances.  These include your Income Tax, Capital Gains Tax and ISA allowances.

John BaxterComment