Well, that’s the year almost done and indeed the decade. So, time to pause briefly to reflect on where we’ve been and where we may be going.
Once again politics dominated the headlines with the interminable debate over Brexit only reaching some form of a breakthrough with the result of the General Election last week.
For some, the large Tory majority will be a relief, avoiding the higher taxes for both companies and the better off, and dodging a profoundly socialist agenda. Others will feel bitterly disappointed that the seemingly last chance to avoid leaving the EU has probably gone. Whatever your political hue, we are where we are. The political logjam has been unblocked. Many will simply feel relief that the squabbling and stalemate in Westminster is over. Politics is increasingly an unedifying spectacle. Yet democracy – for all its critics – has again delivered something positive. We have seen a greater engagement in the tough issues we face as a nation, the freedom to go to the ballot box and cast our vote for any candidate that we wish and a high turnout of those wishing to voice their opinion. We have each made our own individual contribution to the type of country we want to live in. That is a privilege easily overlooked or taken for granted.
In the investment world, the news for much of 2019 was dominated by the ‘Woodford saga’ where a once idolized star investment manager fell to earth very dramatically. Convinced of his own genius by a supportive media and other players, he took ever greater risks until the whole thing blew up and the fund was first suspended and then closed with estimated investor losses of around 35%.
You may have also read about the failed investment scheme London Capital & Finance which collapsed this year leaving thousands of investors out of pocket as well as other media revelations such as the eye-watering fees charged by the largest wealth manager in the UK, the suspension of some major property funds and even cryptocurrency fraud.
These stories are hugely disappointing as they affect real families and their life savings and will undoubtedly cause hardship to many. The irony is that a simple, low-cost, globally diversified investment strategy, like the one we use to manage your wealth, would have delivered a positive return, well ahead of inflation and cash returns in 2019.
One of the often-overlooked benefits of working with an independent firm of Chartered Financial Planners like Capital is ‘scam avoidance’. You can rely on us to leave no stone unturned in our efforts to ensure that any recommendation we make for you is one that we are completely comfortable with and will provide you with the best chance of achieving your goals with the minimum of risk.
Remember, investing well is simple, but not easy. To remind you of the core pillars of our approach:
- markets work well and are hard to beat, so capturing the market return on offer using lower-cost, well-structured products, makes good sense;
- spreading exposure broadly across markets, sectors, and companies to ensure the risks we face are well-diversified, will always sit at the core of a successful long-term strategy;
- balancing out the risks of shares by owning high-quality bonds provides a good insurance policy against tough times in the equity markets;
- being patient (living through the short-term falls) and being disciplined (maintaining the philosophy and strategy over time) are fundamental to achieving the returns you need to fulfill your financial goals.
Reflecting more broadly on the past decade, it’s easy to focus on thoughts of Trump, Brexit, wars in the Middle East and terrorism closer to home. So, it’s worth looking at some of the facts that confirm that by any measure it was the best decade in history:
- 28% of all the wealth mankind has ever created (measured as GDP per capita) was created in these 10 years
- Extreme poverty more than halved, from 18.25 to 8.6%. The number of poor was reduced by 158,000 every day.
- The child mortality rate was reduced by a third. As a result, 2.1 million children’s deaths were prevented this year alone.
- Global life expectancy increased from 69.5 to 72.6 years. So, every day in the past decade, the average life span increased almost 8 hours.
- Despite global warming, deaths from climate-related disasters declined by a third to 0.35 per 100,000, a reduction by 95% since the 1960s.
(source; Johan Norberg, Progress: Ten Reasons to Look Forward to the Future)
It’s incredible to think that only 10 years ago we had no iPads, no Apple Watch, no Alexa and no Instagram. Moore’s Law states that the speed of change doubles every 2 years and so the next decade promises to be extraordinary in so many ways and we plan to be there to advise and guide you through the years ahead.
Providing stewardship and professional guidance for your family wealth and future security is a privilege that we take very seriously, and I am grateful for the trust you place in the team at Capital. We will always strive to do the right thing and look out for your best interests. We have some exciting ideas and plans for 2020 and I look forward to sharing them with you.
In the meantime, try to forget about politics, the markets, and your portfolio and enjoy the wonderful festive time ahead meeting up with loved ones, friends and simply being grateful for all that is good in our lives.
With best wishes,