Darren Scott-Guinness: Keeping doctors and dentists informed with the latest economic and investment news.
In recent months there have been a series of “drastic measure” headlines in the press advising investors to sell virtually all investments as stock markets head into turmoil and are expected to fall further this year. Whilst investments always need to be carefully selected and managed in line with both market conditions and the investor’s “risk tolerance”, a long-term approach is essential.
Doom and gloom from top financial analysts
Communications in the press from top financial analysts is leaving investors fearful about the future of their investments.
“Equities have become very dangerous. Watch out. Sell mostly everything… The game is up. The world is in trouble.’ Andrew Roberts, RBS.
With a massive £85 billion wiped off London’s top stock index, the FTSE 100, January 2016 could be the worst start to a New Year for world markets, ever!
First understand the key causes affecting the market
So, what is causing the stock markets to take such a hit?
Global oil prices are at the root of the issue concerning stock market performance. This month, oil prices have plummeted to levels pre-financial crisis; $30 a barrel, as reported by Standard Chartered, and, predicted they could fall as low as $10 a barrel. In 2014, average prices per barrel were as high as $115, showing a 75 percent fall, in broadly 18 months.
“Oil price drop could see petrol (UK) fall to 86p a litre” RAC
This plummet in oil price is due to an oversupply of oil across the world, driving competition upwards and price downwards. There is additional market threat that once sanctions are lifted from Iran, supply will increase further and subsequently results in these even lower prices that analysts are forecasting.
In addition, the strong US dollar is making it expensive to buy oil using other currencies and their higher interest rates further knocks economic confidence.
Finally, let’s not forget about China’s weakening economy, who’s “market correction” exercise is showing no signs of turning around their own financial crisis.
How this affects your investments
It certainly is a lot to digest and investors can not be blamed for showing signs of concern for their future returns.
A slump in the stock market can have a serious effect for savers with pensions and investments linked to stocks and shares.
However, like with all investments, there is always the risk of values falling as well as increasing.
During times when values slump, it is recommended to work with a financial adviser who can help steer you through the variables and ensure you are poised to respond if and when necessary.
It is also essential to view investments with a long-term approach. Typically, given enough time, investments will bounce back. The important thing to assess is what to do in the meantime. Do you follow the guidance being plastered over the newspapers to sell your shares and move on? Or do you hang in for a brighter tomorrow?
Read more of Darren’s Economic & Investment updates:
- Planning for gradual or immediate retirement
- Help your children buy a home
- Salary Sacrifice – balancing the benefits
Before you go…
Don’t forget to download our latest Talking Money quarterly magazine, containing related articles by Darren “How to invest your money in 2016” and “The 2016 financial landscape”.
Dental & Medical Financial Services can help you with careful investment planning, based on your attitude to risk. Call today to speak to Darren.
Tel: 01403 780 770