Author Richard T Lishman, Managing Director of money4dentists, a firm of specialist Independent Financial Advisers who help dentists across the UK manage their money and achieve their financial and lifestyle goals.
Time to share
The stock market is a volatile environment at the best of times, but since the Brexit referendum and Trump's election as US President, the market has been subject to an even higher level of turbulence than usual. This began to show before the results were even announced, but as soon as Theresa May declared that article 50 would be triggered in March 2017, the pound fell further against the euro and the dollar. This had an inverse effect on the FTSE 100, which climbed to a high of 7,000 before falling in October as concerns emerged over whether the Bank of England would increase interest rates.
Although it didn't take long for this inverse relationship to peter out, with both the pound and FTSE increasing at one point, we have since seen a range of interactions between currency and equity markets – including the FTSE 100 hitting a record run. The shock result of a hung parliament in the snap election naturally exacerbated the situation, with stock prices shown to increase and plummet in equal measure. Until Brexit negotiations are complete, it is likely that the uncertainty and volatility will continue.
For dentists with investments in the stock market, it has no doubt been a tense time, though experts predict that it might actually be the long-term actions of the government that will prove to be the most pertinent to investors' outcomes. Investment director for personal investing at Fidelity International, Tom Stevenson also adds, "It will pay to keep an eye on your long-term financial goals and to place your investment eggs in a wide variety of baskets."
While this is not new information, as those of you with an existing portfolio will know, it is certainly a useful reminder about the importance of a balanced portfolio; one that will no doubt prompt many of you to revisit your investments. As always, when rebalancing your portfolio, you will need to consider the level of risk versus reward of each asset – in other words, are your investments still working in a way that maximises returns and minimises losses? If recent events have caused an element of under or overexposure in certain assets, then now might be the time to either spread your investments among different classes of assets, or proverbially prune away any that are underperforming and putting the rest of your portfolio at risk.
It is worth remembering, however, that while certain shares may not be performing at their best at present, this may not be the case several months, or even years down the line. The reality is if you want to make money, you have to be prepared to be in it for the long haul. True, stocks are often regarded as a riskier investment opportunity in comparison to others, but they are also notorious for outperforming assets such as bonds or savings accounts, usually achieving an average return of around 10-12 per cent over the long-term. One could argue, then, that the risk is worth it if it produces good results.
However you choose to proceed with your portfolio it is always worth seeking the advice of a specialist Independent Financial Adviser (IFA), especially if your investment commitments are part of a much larger financial plan. A company like money4dentists can help you nurture and manage your portfolio so that it produces the best results over time in line with your needs and aspirations.
Equally, if you are new to the equity market and thinking of making an investment, specialist advice is always advisable. An IFA can work with you as little or as much as you need to advise on what kind on investments would suit your personal goals. There a number of different services available, including:
- Execution only: You instruct the IFA to buy and sell your shares at a given time and at a given price.
- Advisory: You ask the IFA for assistance in deciding when to buy and sell shares and at what price. If you are a major investor, the IFA may take the initiative and contact you to discuss potential transactions.
- Discretionary: You give the IFA power to buy and sell your shares when they think they can obtain the best deal for you.
All in all, there are good investment opportunities to be had in the stock market, despite everything that has happened, and in many instances will be a matter of 'riding out the storm'. If you have concerns about your investments, need help rebalancing your portfolio or are thinking of dipping your toe in the water, contact an experienced IFA today.
1. Health and safety executive: Working days lost. Accessed online 2 May 2017 at http://www.hse.gov.uk/statistics/dayslost.htm
2. GOV.UK: Statutory Sick Pay (SSP) employer guide. Accessed online 2 May 2017 at https://www.gov.uk/employers-sick-pay/entitlement