Brexit Fear

Now is a very important time in history, where individuals need to take notice of what is happening around them in the financial world, should they wish to acquire additional wealth and have the option to retire faster. Government lending is at an all-time high, the Banks have been given a crutch by the Government, the Bank of England (BOE) has reduced interest rates to an all-time low, Quantitative Easing and austerity cuts look as though they may be here for many years to come, pension schemes remain underfunded and we are now all living longer. On top of all this we now have Brexit and I have to ask the question ‘what have you and your financial adviser done to hedge your pension and investment portfolio against the UK’s exit from Europe’?

It’s frightening to think about what the future holds, with economies, cultures and technology changing at the rate it has over the last decade, it seems almost impossible to imagine what the world will look like as we arrive at the later stages of our life. But we can give ourselves a helping hand if we act quickly enough and reclaim our personal power from the financial services institutions.

Creating sufficient wealth over our working lifetime will enable us to have choices in later life. Being dependent on others in the future, I do not believe, will be a happy place. The question is “how do we create additional wealth without putting additional pressure on our current expenditure?” With low interest rates and mediocre investment returns, creating additional wealth is becoming more difficult. However, suppose I could show you how to create additional wealth from the money you have already accumulated to date. No additional expenditure required, but a very favourable outcome.

Many investors concentrate their portfolio in their home stock market and in some cases they only hold a small group of stocks. This is often a common occurrence when people have bought shares because of Utility or Bank offers or inherited a share portfolio from their parents or a relative and feel obliged not to cash them in and take the proceeds. Many company directors working for larger organisations also have large shareholdings, often in share incentive schemes and due to a sense of loyalty, find it difficult to sell the stock when it’s a good financial decision to do so. There is often an emotion attachment which is difficult to shift.

Limiting one’s investment universe to a handful of stocks, or even one stock market, is a concentrated strategy with possible risk and return implications. Consider the analogy of the roulette wheel. If you want to gamble for the highest odds you place your chips on a single number and if you are successful you win big. Likewise you could spread your chips around single numbers on the table (not to dissimilar to the retail unit trust fund managers or buying individual stocks and shares) and hope that the odds on the numbers that win are more substantial than the losses that did not.

Alternatively you could gamble by spreading the risk in your supposed favour by betting on red or black and get offered even returns by the house (or by using in-house managed funds). But it’s not the 50:50 odds you would expect. The wheel is always in favour of the house therefore by betting on red or black you will have an 18/38 chance of winning 47.37%, with the house winning 52.63%. This is again similar to active fund managers, even if they do outperform the benchmark, the additional charges incurred will most likely, over the longer term, reduce the return to below the benchmark. The question is, does investing with active management make a substantial difference to your return or is it just gambling with your money?  It is worth remembering that while a betting system may sound like a good idea, over time, they have been proven beyond any shadow of a doubt to be losing plays.

The media is full of experts predicting which markets are going to perform best over the forthcoming months and years, so investors by listening to this noise, quite often form a biased opinion of what’s going to happen next. If they decide to follow up this prediction with action and buy or sell stock to put themselves in a financial position to take advantage of this prediction, they are gambling not investing. The financial professional may make a prediction because they want to appear on some form of media commentary, or to advertise their company or make some noise with their prediction because they would like some personal acknowledgement. However, if it all goes wrong, which it does, the consequences have to be faced. I believe making predictions is foolhardy, because any amendment to political, global currency fluctuation or investor sentiment will see all bets fall out of the window and who can control such changes.

If I am ever asked ‘which financial sectors should I buy next, to get the best return on my investments?’, I often in the nicest possible way, have to refer to my lack of crystal ball reading skills and point out that no one knows with any degree of certainty. Even if a commentator calls the markets correctly, you still have to ask was it skill or just random luck. Even the most powerful professionals in the world of finance make these predictions and call it wrong big time, with huge global consequences.

So, why try and predict outcomes not under your control. Ask yourself “why would you pay somebody, who said that they can predict what is going to happen next?” and perhaps worse, why would you believe them if they said they could. According to Google, there are 1.2 million fortune tellers (or people suggesting that they can predict your future) appearing on their site, and without checking them all, I would expect a financial fee to be passed across their palms before they tell you about your long healthy lifespan and future search for love. Perhaps some may say we should add fund managers to this list.

A good question to ask yourself is: “would you pay a fortune teller to predict your financial future?”   If not why are you paying your fund manager?

The financial services world is not always as it seems. Wealth that belongs to you, is systematically being taken from your pension and investment accounts unnecessarily, transferring your wealth from you, to the financial services industry in the name of active management (I call this guessing or gambling). I believe now is the time to stand up to the industry and take back power and have control of your money.

My book ‘Retire Faster’ available  on Amazon will guide you through the investment jungle, where currently, the investor is the prey. I will show you how to become the hunter and demonstrate to you, that there is another way to create wealth. A way that allows investors the opportunity to achieve greater financial efficiency, greater independence and a more profitable return, whilst enjoying a much more transparent and consistent investment experience.

The question is, do you want to continue to gamble with your retirement fund, or invest it efficiently?

 

Fear and uncertainty caused panic and ‘Brexit fears’ in the markets last Friday after the vote. The Media (bless them) lined up industry experts to tell us how the markets are going to crash and Armageddon will again rule the UK.

According to Media and press, DIY Investors who use a well-known direct investment website complained extensively using social media, that they were unable to sell stocks due to the high demand of use on the web site. They were all selling at the same time.

All I can say is ….why?

At what point did the DIY investors wake up in the morning to see the Brexit result and then think ‘I need to sell my shares today, that’s not what I expected’.

Really?

At what point did the DIY investors think that if markets are on free fall, that some broker somewhere is going to buy the shares. Shares are bought, only if there is a purchaser the other side. They will buy, when the stock price stabilises not when it’s in freefall, you cannot choose your price.

The Brexit result, either way had been built into the share price. Markets have traded pretty flat for the last 2 years and the FTSE 100 index was higher at the end of Brexit Friday than back in February, when Mr Cameron declared the date of the Brexit vote.

So why are there Brexit Fears?

With 60 million trades a day around the globe, why did the DIY investor have to sell in mid turmoil? Did they think they knew more about the global market situation then all the other trader’s in the World or are they easily led by the media who are trying to create programmes and newspaper articles to keep their readers or viewers engrossed in their coverage of events? Brexit fears sell!

Who’s to know, but what we do know is that these DIY investors do not have a strategy they can fall back on in times of turmoil. Trying to panic sell on the day markets are predicted to fall, I admit is by definition a plan, but not a plan I would suggest is very good for your health or a plan that creates wealth over the longer term.

Playing ‘beat the market’ is no difference to playing poker, playing the roulette wheel or betting at the bookies. Can you imagine betting on a horse and its winning down the back straight and you think ‘I am making big bucks today’ only to see it slow up and begin to be overtaken by the chasing gallop down the home straight. If you ran back to the bookie and said ‘can you buy my bet back off me please, I am going to lose money’ and then the rest of the losing punters crowded up behind you asked the same question, what do you think the outcome might be?

Putting your money on any specific stock is gambling and gambling is geared towards the house winning and you losing. You may be the winner on occasions (and perhaps a big winner at times) but the house wins more than you do.

The investment houses are the same, you buy their product and the price goes up you win or down you lose. In the meantime you lose anyway because the house is taking large charges from your investment each year, so why are they worried. They just need to keep you as a customer.

If you enjoy the ride and the stress and enjoy moaning when you can’t sell your stock on the day its falling and you don’t mind paying a fee to the investment house for the privilege of being a member, then you must continue to burn your wealth. It’s your right to do so, but please don’t moan in the media, the wise investor does not feel sorry for you.

Why not consider another way to invest. A way whereby the investor has a strategy for the longer term, a strategy that says if the markets in one part of the world are negative then this creates a positive market somewhere else in the world that I will be able to take advantage of. Instead of playing ‘beat the market’ why not consider having an investment strategy that ‘buys the global markets at the lowest cost,’  then sit back watch all the those who think they know ‘panic’ knowing your investment strategy over the longer term will create the wealth you seek.

No panic, no stress no Brexit fears, no ulcers. That’s just the way my clients and I like it.

Hannah Goldsmith.

For over 8 years I have been advised by Hannah. The advice has been well thought through, appropriate to my circumstances and given in a straight forward manner. Options for investment have been offered, but decisions have been mine. Where the choices have proved not to have met expectations, the remedial action has been timely and sensible. Goldsmith Invest has worked well with my Accountants and Lawyers and kept investment Managers up to the mark. I would recommend Goldsmith Invest without hesitation.

Dr A V