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We’re here to support you ……

We know investors are anxious presently.  This unprecedented time of health concern created by the Covid-19 virus, leading to a virtually global economic closure, is a worry to all.

We have not had many calls from investors or pension clients – in truth – but I am sure there is anxiety amongst all sectors of Society.

As a business, we must provide what reassurance we can, given the position that is unfolding.

Action or inaction

The investment wisdom for all long term investors is to remain invested through investment market cycles – including crashes, as no one can predict the future.  So, selling out to buy at a potentially high asset/unit price in future is clearly not good action.

Being counter intuitive doesn’t come naturally to many, the human race is programmed to hate uncertainty.  So, considering the fact that investing at the best of times doesn’t produce certainty, the pace of the health concerns and economic lockup is naturally creating anxiety for most.  Believe me, I have had my sleepless nights!!

We know the Coronavirus is being covered more than anything else I can recall (even Brexit!) so at a time like this, maybe less is more…?  Keeping it very simple…..

Quality independent financial advice cannot make predictions, it should provide a balanced view and outcome, meeting the long term need of investors/clients.  It is therefore imperative to stay invested through the troughs (as deep as they are) – stopping income payments, where possible, as previously stated in prior communication.

Click the link to read the articles:

Stopping payments from investments when unit prices have suffered a crash means that units do not need to be ‘sold’ to pay out the ‘income’.  So, as investment markets recover the value of the units remaining can recover – rather than disappear.

The effective ‘Acting dead’ remains the best analogy I can express in relation to investment market action.  So ‘inaction’ is the accepted best position.  This, of course, doesn’t mean that we don’t have worse to come… we simply do not know for sure.

I am cognisant about providing too many updates but a little perspective on the investment markets may be needed.

The numbers are bleak – there is no getting away from the downside – but against the relative benchmark, peers and how investors (by proxy judgement) view their investments against an index, the position remains – the risk models have delivered to expectation and above.

I am mindful of providing short term numbers – but we know our long term performance has been exceptionally strong against the relative sector.  The shorter term position of asset price falls are creating the concern.

Staying invested remains the thinking as no-one invests for the short term.

Investment Index

I know that many watch the FTSE 100 and base their view of investments around the index.

At the time of writing the main UK index is off around 33% from a month or so ago!  Remember, this is a basket of the largest stocks that are Global in nature for the majority of companies included in the index – where all sectors of stocks/shares have been hit very hard.

To support the information required by some, we thought an update will help – as nasty as it is!  I have only produced the shorter term data.

Portfolio Risk Model 2

1 month           3 months              6 months             1 year             2 years
-7.57                -5.51                    -5.12                   -1.86               0.06
Benchmark 0-35% shares
-8.27                -6.48                    -5.96                  -1.65             -0.53
Difference: Portfolio v Benchmark
0.70                 0.97                       0.84                    0.21              0.58

Portfolio Risk Model 3

1 month           3 months              6 months             1 year             2 years
-11.7                -8.95                    -8.22                   2.26               0.40
Benchmark 20-60% shares
-13.57              -11.61                  -10.91                  -6.29             -5.59
Difference: Portfolio v Benchmark
2.20                   2.66                     2.69                   4.03              5.99

Portfolio Risk Model 4

1 month           3 months              6 months             1 year             2 years
-13.19                -10.29                 -9.75                  -3.25               0.49
Benchmark 20-60% shares
-13.57                -11.61                  -10.91                 -6.29              -5.59
Difference: Portfolio v Benchmark
0.38                      1.32                    1.16                   3.04                5.10

Portfolio Risk Model 5

1 month           3 months              6 months             1 year             2 years
-13.61                -10.72                 -10.18                 -3.67               -0.91
Benchmark 40-85% shares
-16.91                -14.02                  -13.39                 -7.42              -6.13
Difference: Portfolio v Benchmark
3.31                      3.30                     3.21                  3.75                5.22

Portfolio Risk Model 6

1 month           3 months              6 months             1 year             2 years
-15.30                -12.05                 -11.69                 -4.46               -1.25
Benchmark 40-85% shares
-16.91                -14.02                  -13.39                 -7.42              -6.13
Difference: Portfolio v Benchmark
1.61                      1.97                     1.70                   2.96                4.89

Portfolio Risk Model 7

1 month           3 months              6 months             1 year             2 years
-18.65              -15.05                 -14.71                   -6.73               -2.79
Benchmark Weighted Sector Average
-19.35                -16.82                -16.06                 -10.43              -9.69
Difference: Portfolio v Benchmark
0.70                     1.77                     1.36                    3.70                6.90

Portfolio Risk Model 8

1 month           3 months              6 months             1 year             2 years
-19.77              -15.91                   -15.50                  -7.63               -3.38
Benchmark Weighted Sector Average
-20.40               -17.72                  -16.88                 -11.17              -10.55
Difference: Portfolio v Benchmark
0.63                     1.81                     1.38                    3.54                 7.17

Portfolio Risk Model 9

1 month           3 months              6 months             1 year             2 years
-21.39              -17.32                  -16.89                   -9.83               -5.98
Benchmark Weighted Sector Average
-22.20                -19.37                -18.42                 -12.67              -11.98
Difference: Portfolio v Benchmark
0.85                     2.05                     1.53                    2.84                6.00

We are mindful that we should not distract your attention during such a surreal crisis of health so please excuse the update if what we provide in the form of content is too much.  We will reduce the volume of content being sent out, on the basis of less is more!

What I would personally like to express is that we will assist all we can so if you have a question feel free to call me.

What I can also confirm is that long term investors are investing at present…  We have received a number of substantial investments today which are long term, where the investors are clearly seeing the crash as a long term opportunity.  At the end of the day, the advice is relative to individual circumstances so considering hindsight and what unfolds from substantial economic and financial support – markets recover so a long term view must always be the focus.

Most importantly – stay safe.

Take care.

Richard, Sian and the Best Price FS Team

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