Looking forward in 2019

It’s that time of year when the papers will be full of predictions about the coming 12 months, more often than not under an attention seeking headline! I’m writing this several weeks before the end of 2018, in a week of so much political uncertainty and I am in no doubt that ‘short term predictions’ on many financial aspects are perhaps more difficult to call, than they have been in recent memory.

So, forgive me for focussing on perhaps more predictable expectations for the coming 12 months.

Stock Market Volatility

November saw falls in global stock markets brought about mainly because of global trade concerns between the U.S. and China. Volatility will continue throughout 2019, but this can present opportunities as well as a need for caution. Taking your cash out after a dip will confirm a loss. Reminding yourself that it is a medium- long term investment and sitting tight will not. It’s a fact that investing for 5 years or longer, can significantly reduce losses, that’s why the medium-long term phrase actually is true. Ask yourself if you really need the money now? Review where your money is held. Is it invested diversely or are you relying too much on an asset class or fund, whose best days are in the past. Review your risk tolerance and avoid hasty decisions. The opportunities? That’s about adding to investments after a dip or investing monthly, rather than as a lump sum.

Savings rates on deposit accounts

These are likely to increase as we go through 2019. Interest rates are in a ‘low but rising’ phase. So have a look at what your bank are paying as interest. The most competitive instant access accounts are paying about 1.5%, lock savings away for 1 year and you could get c.2% or through an accessible Cash ISA you may get about 1.2%. (thisismoney.co.uk – 12/12/18)

Sluggish House Market

I can’t see this changing until there is more certainty with the short term outlook. For most people it’s the ‘biggest decision’ and therefore if they have a choice about buying or selling they may defer such decisions.

Energy Bills

…are expected to increase in 2019. There is a price cap from January 2019 which will help those who have been on variable tariffs, but because wholesale prices have been increasing any benefit may be short-lived

Emergency Fund

Finally with so much uncertainty, a very basic suggestion that we should all consider. Do we have enough capital acting as an emergency fund? With volatility in currency rates and stock markets as well as the very likely increase in costs associated with living, having that rainy day fund is all important. As a household that has had to pay for boiler repairs and unexpected car servicing costs in what has been an expensive week, I am mindful of the benefit of having some money put away for the unexpected.

Author: Phil James, Grosvenor Consultancy Ltd

There are advantages and disadvantages to using all of these strategies and they depend on individual circumstances so don’t take action without seeking competent advice. Tax rules, rates and allowances are all subject to change. The Financial Conduct Authority does not regulate tax advice and some forms of offshore investments. The value of investments and the income from them can fall as well as rise,  you may not get back the full amount you invested and past performance is no guide to future performance.

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