Looking for the growth areas in the global economy is interesting. Given that the population is increasing, and wealth is increasing, it should be easy. However, within the rosy long term picture it is easy to see uncertainty and worry. Trump, Putin and Brexit sum up the geopolitical worries. Then we have terror, viruses and the totally unexpected.
From a UK perspective, things are still fairly benign. We are probably headed for a soft Brexit (BINO – Brexit in name only). The main political parties stagger from crisis to crisis but democracy is safe. Stealth taxes increasingly provide a disincentive to work – the rich are getting richer, but they are getting to keep less and less of what they keep. More people with wealth will leave.
What Do I Know?
1) Active investing in shares works but requires continuous management
2) Passive investing won’t beat the market
3) You should buy low and sell high
4) The market can remain irrational longer than you can remain solvent
5) Trading frequently is very expensive
6) Fees can destroy growth
7) There are always hidden fees and spreads
8) The FTSE 100 has done nothing for ages
9) The FTSE 250 has a long history of growth
10) Transparency and honesty is everything
11) AIM has done well
12) Diversifying to global markets contains currency risk and usual company/state risk
13) Black swan (random disasters) are far more common than expected
14) Diversifying the number of shares above 20 ends up with just buying the index but more expensively
What Should You Do?
Here are my ideas on what you should do:
1) Leaving money sitting in a bank is not a strategy.
2) First and foremost, go out and buy what you want, if you can afford it. There is no point in waiting until you are too old or infirm or stupid to enjoy it.
3) Then buy the biggest most expensive house you can afford.
4) Then put as much money as you can into a pension.
5) Then find a good IFA – if they exist near you – and follow their advice.