Ways to Trump-proof your investments
Independent financial adviser, Paul Ray of Significant Financial Advisers, gives his opinion on some straight-forward ways of ‘Trump’ proofing investments
With war in the Ukraine still raging and now the re-election of Donald Trump combined with uncertainty about the future of the UK economy, it’s no wonder investors are concerned about the impact of these factors on share prices.
However, there is no need for investors to panic. Instead, it is a good time to review your investment portfolio and ensure that it is positioned to weather any economic storms and to capitalise on forthcoming opportunities.
Love him or hate him Donald Trump has given US share prices a boost. However, his withdrawal from the Paris climate agreement could negatively affect ‘greener’ investment opportunities.
Concerns about rising inflation and interest rates have led to bond market sell-offs, with yields reaching multi-year highs. This volatility extends to the UK, where government borrowing costs have risen.
Future proofing your investments as much as you can, is not about making sweeping changes, instead it will involve small, sensible incremental changes that will provide additional strength to face the challenges ahead.
1 Diversify. Different asset classes will perform well or poorly at different times. If you have a good spread you will limit your exposure to the poor performance of a single asset class.
2 Look further afield. Look beyond your home market and consider investments in countries that are well placed to withstand any economic downturn in the UK, such as the USA.
3 Become philosophical and take the long view. Be in it for the long haul.
4 Quality. Look for quality companies to invest in. During recessions and stock market downturns, high quality established companies usually hold up better than more risky operations offering what appear to be high returns.
5 Cash is not necessarily best. During economic uncertainty, it is tempting to opt out of the stock market and take the perceived safety of cash or gold even. This strategy is very risky; stock markets can recover quickly with little warning so you risk missing out when prices do start to recuperate.
by Paul Ray
