Mum and Dad Investing 2019 - A 2-Minute Read
Published Apr 02, 2019
Even if you’re just dabbling in the stock market, 2019 is bringing plenty of opportunity for investment. There are however four key points that are worth taking into consideration.
- Major world trade issues and recession undertones make the decision to buy now or later in need of careful consideration.
The ongoing trade wars between the US and China along with the slowing economy continues to bring apprehension in buying in the US share market. Interest rates in the U.S. rose through most of 2018, having a negative impact on bond markets. This could make them more attractive, particularly if trouble lies ahead.
There is some legitimacy in investing in emerging markets (markets that have low incomes but rapid growth). Educated investment in these markets is essential as they can be highly volatile.
- In the UK and Europe, Brexit remains a critical point for consideration. The Financial Times Stock Exchange (the London Stock Exchange known as the ‘Footsie’ or the FTSE) is relatively resilient from this political discussion as approximately 70% of the FTSE earnings come from overseas. Nervousness however does play a part in the decisions being made around this market.
While there is some need for caution around U.K. domestic stocks and fixed income stocks. The pound sterling is appealing bearing in mind there is a possibility it could fall further.
- Markets continue to experience mixed conditions that carry an undercurrent of nervousness Corporate profits have been trading at cyclical highs for some time, many argue that the bell curve would suggests it’s time for a decline. This is resulting in some investors holding their money while they establish whether a world down-turn is imminent.
- Rising global interest rates are likely to continue to impact the world economy throughout 2019. Increasing borrowing rates resulting from central banks (excluding Japan) indicate that they are reducing economic stimulus.
Climbing interest rates means that bonds (with a shorter duration) may offer an opportunity for some investors to broaden their portfolio.
In short, there is legitimacy in caution around the US markets and domestic UK markets. UK multinationals however offer some opportunity as do emerging markets in Europe.
Highly priced stocks in the US may be worth selling at good prices. Be aware that the world economy is cyclical and has been on the high of the bell-curve for some time.
There are opportunities to invest and plan beyond 2019. Remember the share market is a middle to long term investment – account for you cash to be tied up for a minimum of five years.
Principal and Financial Adviser, Forsyths