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Female Focus
Are we heading for another market crash? If we are, what can you do to protect your portfolio?
Far from our being free of the recessions which have dogged UK and global growth in the recent past, it seems bad news is again bubbling to the surface. The International Monetary Fund warned that governments must not allow “mediocre to become the new reality”, as data from three independent research agencies revealed emerging market (EM) economic growth, had slipped to its lowest level since the 2009 slump. Commodity driven countries such as Brazil and Russia have been hit by the shrinking oil price – although events in Ukraine have compounded issues for Russia – while the very strong dollar has exacerbated the outflow of capital from others. Weak jobs data in the US has revealed increased employment, but at about half the rate predicted by a Wall Street consensus. The US Treasury stepped up calls for big economies – including Europe and Japan – to boost demand as the global economy was becoming “increasingly unbalanced”, whilst, the UK’s Office for National statistics released data showing that Britain’s building sector had contracted by 0.9% in February. This was a surprise and was far below economist’s expectations of around 2.2% growth during the month. So what can be done? There are a few approaches to investing which may help you prepare for a potential crash, if indeed this is the path which markets are headed. Some might say the most obvious answer would be to leave all your money in cash. However, while you may not see the value of the cash plummet in the conventional sense – it will
still be eroded by inflation, and bank security cannot be as relied upon today as it once was. Gold is the traditional safe haven when all else is uncertain. Other physical assets provide emotional security for investors, such as bullion, coins, bricks and mortar. Property can also generate a yield, making it easier to ride out a crash. However all of these carry their own risks, and you wouldn’t want to switch everything you have into just one of them. There is only one real way to remain invested and safeguard against a market crash, and that is to diversify your portfolio. Strategic
asset
allocation accounts for over 90% of risk, and will shelter your portfolio from depreciation if a bubble bursts. If equity markets fall, or property is hit, a well- diversified portfolio will safeguard your investments. So, if you are looking for investment advice or are concerned about your current portfolio and would like to have it reviewed, call Tracy on 966 848 960 or email
tracy.storer@
aesinternational.com. See main advert on page 12.
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