Wealth Management

Cost of living and other crises

This time last year we ran a webinar entitled ‘Tuning out the noise’. The thought-provoking webinar looked at the modern era; we have far greater access to world news at just the click of a button, or from flash news alerts on our phones. While some of this is informative and helpful, this is not always the case as newspapers and websites publish news stories that will attract readers. It can be all too easy to focus on these stories and get gloomy, disheartened, or uncomfortable about the reported danger to life, society or wealth.

3rd February 2022

The news cycle

Covid dominated the news cycle in 2021 and is still creating headlines, but there are a number of other issues that focus has switched to at the end of last year and into 2022, all of which have a potential impact on our lives. Some are close to home, inflation and energy price increases affect all of us, but also a resurgence of global political unrest, notably in the Ukraine but also in China and even political uncertainty in the US.

Cost of living

Certain newspapers have named today Black Thursday ahead of the announcement of a big rise in the Energy Price cap, alongside petrol and supermarket prices which have also been rising sharply. The Monetary Policy Committee have also announced an increase in interest rates from 0.25% to 0.5%

Real world consequences

Last week the unrest in Ukraine led to a sharp drop in global stock markets and headlines in the press were predictable in their content as we have seen so often before: “billions wiped off stock markets”. As is often the case as markets recovered through last week, there was a notable absence of reassuring articles proclaiming that “billions wiped back onto share prices”.

No crystal ball

It can be easy to feel overwhelmed by this relentless stream of news and at times of stress being bombarded with data and headlines can evoke strong emotional responses from even the most experienced individuals.

So, what can you do to navigate the uncertainty?

Know what you’re trying to achieve

Many of the people who seek advice from us will come along with a problem, “can you tell me about my pension?” or “how have my investments done?” but our starting point at Old Mill is always to consider what you are trying to achieve with the money. If you ask most people, the things that are important to them are future security for themselves and their family. What to do with pensions, investments etc. becomes a lot easier once you have a clear context of what you want your future to be.

In this context, the cost of your current lifestyle and maintaining this into the future is a focus of the service we provide. We can consider future increases in the cost of living alongside the resources you have, not only income but other accumulated wealth to ensure you will have enough, no matter what. For many of our clients they are confident their own lifestyle is affordable but may worry more about their children or grandchildren. Rising interest rates are positive to savers but the younger generation have mortgages that are seeing increasing costs. Part of understanding your own finances is seeing how much you can give away without compromising your own financial security.

Work with an adviser

We can all benefit from a bit of help with reaching our goals. Professionally we may rely on a mentor to navigate the obstacles we face in our career, or personally some of us may be working with a personal trainer to guide us to a healthier lifestyle. At Old Mill we look to have long term relationships with our clients to help guide them through the uncertainty of the future providing expertise, perspective, and encouragement to keep you focused on what is important to you. Alongside this we can ensure your financial strategy is robust, tax efficient and gives you the best possible chance of achieving your objectives.

Ensure your investments are right for you

Part of this service is helping you to understand your own views on investment risk and the trade-off there is between this, and the potential returns you may achieve. This is an important conversation as for many of the clients we work with they are on track to live the lifestyle they want without taking on unnecessary risks.

Adopting a long-term perspective and looking beyond the newspaper headlines can help change how investors view the inevitable ups and downs of stock market investing. This process creates a portfolio that investors are comfortable with, understanding that uncertainty is a part of investing, and sticking to a plan may ultimately lead to a better investment experience.

At Old Mill, we believe that world events, news and investor views are quickly incorporated into share prices. Listening to the economic commentators or investment tipsters you see regularly in newspapers and acting on their picks for the next big investment opportunity is unlikely to be a strategy for investment success.

When faced with so much short-term noise in the media it’s essential that you have your own strategy and remain focussed on the long-term benefits of staying invested and why, rather than being a real source of intelligence, the financial media can often provide more ‘entertainment’ than insight.