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The downturn in the world economy has had a direct effect on the assets that clients hold in order to provide an income for themselves in retirement.
Pension and Investment funds, Residential & Commercial Property are all down in value over the past two years. Even the safe haven of 'cash' has been hit hard with the Bank of England base rate currently at 0.5%.
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We are currently in a severe global recession and one that is very difficult to call in terms of when recovery will take place.
Clients need to review their long term goals and it may be that these will need to be changed to take into account the current economic situation. It may well be that the client who wished to finish work at age 60 may have to go on to age 62 in order for their longer term goals to be realised.
For those clients who are holding 'cash' within their pension and investment holdings, a decision will need to be made at what point they reinvest back into the market. By waiting for a full recovery to be in place they may miss a significant part of the potential upturn.
As with all investing outside of cash holdings, it is important to remember that you should be looking at the medium to long term which is a 5 to 10 year time scale. In addition, a diversified portfolio of assets will reduce the overall risk that you are subjected to when economic conditions are as difficult as they currently are.
This downturn should show that goals should be reset and monitored on an ongoing basis to ensure that they meet your changing circumstances and needs in the future.
Article provided by Andy Barlow of Chartwell Private Client Limited. Andy can be contacted on 01225 473011.
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