The Needle In The Haystack – Growth!

I spend a great deal of time in front of fund managers listening to their opinions, in fact over the last two months I have sat on a dozen round table events with various fund managers. Their job is to promote their funds of course and as a Financial Planning Consultant I have listen to all views and make my own mind up using my experience and understanding. What’s clear is the markets will remain very volatile and the message is quite mixed.

Investec feel that the markets are overvalued and have gone very defensive on their Cautious Managed fund with a large holding of Gold; after Paris that will have driven growth in such investments which will help growth in that fund. However Premier, Threadneedle and Old Mutual see growth as a challenge but not in the same vein as Investec. Performance of course varies hugely depending on the level of risk that you are willing and able to take.

My aim for the coming year is to review the risk levels of all my clients and to manage their expectations as to returns. Growth should be measured against a real return and that of cash, so you should manage your expectations based on the current inflation rate. If you have near zero inflation, then even cash deposits will give a real growth rate. If you achieve a rate next year of 4 or 5% against inflation of 0% then you will have achieved the same performance if you had a 10% return when inflation was around 5% a few years back.

I will cover of risk in another blog, but you first need to ask yourself why you need a certain level of growth. How long are you investing for? Why are you investing? What level of risk will you accept and what can you afford to lose? If you know what your number is then that will help you understand the risk you need to take.

I am not advising you to use any products mentioned here, nor am I making a specific recommendation. The value of pensions and investments can fall as well as rise. You may get back less than you invested.

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