Why Diversifying Your Assets Could Be the Best Strategy For 2017

As the government begins the process of leaving the EU, this year looks likely to mark a significant watershed for the UK economy and its relationship with the rest of Europe.

On the international stage, there is considerable uncertainty about what the Trump administration will mean for business and trade, both in the US and around the world.

The US Economy

Donald Trump wants his administration to bring jobs back to the US, and will revisit trade deals the US has with a variety of world partners. Many predict he will be in for a bumpy ride, reasoning that policies that looked workable on the campaign trail may be more difficult to implement in government. However, investment pundit, Warren Buffett, doesn’t believe Trump will throw the stock market into chaos, or cause a recession. His advice is to keep the long haul in mind.

The UK

The International Monetary Fund (IMF) has raised its forecast for the UK’s growth this year, following better-than-expected performance since the Brexit vote. It now expects the UK to grow by 1.5%, compared with its previous forecast of 1.1%.

Europe

With national elections due in France and Germany, some see signs of a break-up of the Eurozone on the horizon. If these cracks were to deepen, then there would be implications for the financial markets, the economy and business.

Diversity Holds the Key

So, investors are bound to be thinking about their portfolios, and considering what they need to do to provide a degree of futureproofing for their investments. If markets look likely to experience increased volatility, then the old adage about not putting all your eggs in one basket certainly holds true. Ensuring that your assets are diversified across a range of investments such as equities, bonds and property, in a variety of sectors, and in UK and overseas markets, makes good sense.

Many investment professionals agree that, although it doesn’t guarantee there won’t be losses, diversification is the most important component in reaching long-range financial goals, while minimising risk.

It makes sense to keep your portfolio under regular review where appropriate; this will help ensure that you are invested in the most suitable assets and that your portfolio is still in line with your investment objectives.

It is important to take professional advice before making any decision relating to your personal finances. Information within this blog is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation, are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. The value of investments can go down as well as up and you may not get back the full amount you invested.

The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.

Spring Budget 2017 Key Points

  • The Office for Budget Responsibility (OBR) forecasts the UK economy will grow by 2% in 2017
  • UK’s national debt now stands at almost £1.7 trillion or a sobering £62,000 per household
  • Tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018
  • £425 million investment in the NHS in the next three years
  • £536 million for new free schools and to maintain existing schools
  • A three-year NS&I Investment Bond with a market-leading interest rate of 2.2% available for 12 months from April 2017
  • The Lifetime ISA available from 6 April this year
  • £435 million to support businesses affected by the business rates relief revaluation