Sometimes events tell you that a course of action that made a great deal of sense must be re- considered. It may well be that decisions made on the evidence to date need to be altered to cope with the current position.
Many of you will recall that I told you that an investment must be made considering its sheer logic, while at the same time thinking about the “would this keep me awake at night” emotional reaction to it. Normally the latter is asking is the risk too great for me to be comfortable with it. Today I would ask you to think about the same decision but from a different perspective. Although risk must still be the overriding basis of an investment decision, rather than just thinking about the fact that investments can go down as well as up which is true of any asset backed investment, we should be thinking about what it will cost to stay in cash.
The Bank of England has flagged that it is considering taking interest rates below zero, if this should happen it will make it very difficult for the bank to make money as they; In simple terms, make their money on the margin of what they charge to lend and the interest rate they pay to investors. If the Bank of England did move to negative rates although it would be good news for borrowers, it would be bad for investors. Even though this would lead to a reduction in returns on cash you should always have a percentage of your investments in easily accessible cash deposits. What you should be looking at is the percentage you hold in cash. Should you for example be using your ISA allowance in a cash ISA or should you be considering moving some of your cash ISA to a Stocks and Shares ISA. Bear in mind that it possible to invest in a conservative, low risk, portfolio of equity funds. Clearly at this time there is a good deal of uncertainty in world markets which should be considered, but none the less a conversation is free and may well prove worthwhile.
So, to the markets.