Lowes Magazine Issue 123

COMMENT

HOW SHOULD LOWES CLIENTS REACT TO the political turmoil caused when a Prime Minister’s head rolls (figuratively speaking) and the government of the country is put into a state of limbo until a new leader can be appointed? From an investment perspective, in very much the same way that they should react to any other short-term risk – with patience, a long-term view, and the advantage of having a professional and experienced Independent Financial Adviser looking after their investments and other financial interests. 2022 has panned out to be a year of surprises. I’d hazard a guess that at the start of the year few if any of us would have put money on a war in Europe, the resignation of Britain’s Prime Minister and the UK inflation rate rising so rapidly to double digit figures by this time of the year. There is no doubt there are tougher economic times ahead, given the short-term outlook for UK GDP, rising inflation and interest rates, and concerns around UK and global economic growth. Hyperbole is rife in such times and investors’ fears are stoked. Which, of course, is where the value of good Independent Financial Advisers comes in, helping clients to step back, view the bigger picture and keep their heads. Hand holding is what we are here to do in a ‘crisis’ but hopefully, as our clients, you will be familiar with the nature of markets, and any volatility will not be seen as a reason for panic, nor any political or geopolitical events. Sound financial planning is built to see us through these times. Where you haven’t wanted to be in recent weeks and where we have seen panic, is in crypto currencies. Just as their volatile nature suggested they would, these have fallen dramatically this year as sentiment turned against them – Bitcoin, the best known, was down over 44% in the first six months of the year. One so-called stablecoin – a type of crypto-currency deemed, as its names suggests, to be more dependable – failed. We have warned against these speculative investments and unfortunately for those affected by them, we were right to do so. While digital currencies may be viable holdings in years to come, currently they are the wild west of investment. Keep your head

For the majority of us, it is inflation that will have the most noticeable impact on our daily lives, rather than a change in Prime Minister – notably in our spending power. Even with the uplift in interest rates, cash accounts remain behind inflation and in our view, diversified, mainly active investment remains the best course of action for investors in inflationary markets. Where political change is likely to have a more direct effect on us is in the policies of the new Prime Minister and whoever they appoint as Chancellor of the Exchequer – in respect of taxation and notably any changes to exemptions and allowances, many of which are frozen until 2025. With the next Autumn Budget falling a few weeks after the new Prime Minister and potentially a new cabinet are in place, we will have to see what that brings. Whatever occurs, for us it’s business as usual. If you know someone who you feel would benefit from Lowes expertise and service, please do put them in touch. If they call 0191 281 8811, they will be contacted by someone who can help them.

Ian H Lowes, Managing Director

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