Investment Insights
Investments do rise and do fall in value and we strongly advise that professional advice is taken before investing your money
Today I read that the Bank of England committee are to meeting to discuss what the rate of interest is to be set at. At the time of writing 30-year Gilts are paying 1.3%p.a., so as it says on the tin, if you buy a 30-year Gilt you will get a return of 1.3% p.a., great hey, roll out the champagne! The problem though is that if we take inflation at 2%pa then essentially that would be a negative return of 0.7%pa. The collective wisdom of the crowd (the market) is telling you that there is no risk of inflation of 2% for the next 30 years, now someone will be wrong, but at this stage there is either too much money in circulation to meet the demand of investment, potentially no growth or even deflation. None of these are a good position to be in unless you are a borrower of capital and in a deflation world would you buy an asset that is going down in value with borrowed money, ask a Japanese citizen. The challenge as always is to allocate capital to investments that have the potential to rise in value, and one such example is to own companies that can maintain and grow their profits over long periods of time. So, ask yourself this question, do you know what you own and what is its growth potential within your pension and investment portfolio? |
AuthorSteven is a Fellow of the Personal Finance Society, whom is passionate about investing and getting the most from your money. Archives
February 2024
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Steven Mufti & Associates Ltd is authorised and regulated by the Financial Conduct Authority.
Financial Services Register Number 607613. Registered in England & Wales, Company number 8664240. Registered Office address: 27 Armitage Court, Ascot, Berkshire, SL5 9TA. Telephone: 01344 623811 Email: advice@smawm.co.uk The guidance and or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted to customers in the UK. The FCA does not regulate taxation advice. The value of your investments may fall as well as rise. Financial Conduct Authority register: https://register.fca.org.uk/ShPo_FirmDetailsPage?id=001b000000NMlk7AAD |
6/5/2021
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