Investment Portfolio Update – October 2019

I am writing today to keep you up to date on how we are positioning portfolios in the run up to the potential Brexit deadline of 31st October (although keeping in mind this is not the first Brexit deadline we have seen, and may not be the last) and in light of some weakening economic data.

The slowdown in the global economy continues and the chances of a recession developing are increasing. Some countries such as Germany are probably already in recession, that is have a shrinking economy. However, even if recessionary conditions spread to other nations, we expect the extent of the economic contraction to be shallow and well short of what occurred in 2008/9. Nonetheless, the knock to companies’ profits would be felt by the stock market and equity prices would fall. 

Against this backdrop, equity yields are generous when compared to virtually every other financial asset. We are by no means certain that a recession will develop in the US and if that pivotal economy can continue to grow, equity markets have the potential to make further modest gains over the next couple of years. Therefore, rather than reducing equity exposure, we are making changes to the portfolio to limit the damage that a recession might bring.

Yields on government bonds around the world are at tiny levels. UK gilt yields are now virtually non-existent and the government is able to borrow at long term interest rates of well below 1%. 

On such yields, any capital gain potential if a recession does strike will be small. US bonds yields are more generous at a little below 2%. This means that if the US falls into recession, US Treasury bonds can potentially deliver a worthwhile capital gain. Thus, US government bonds appear to be a better option for the portfolio. 

As we have no wish to take any currency risk on this position, we are buying the sterling hedged Vanguard US Government Bond Index fund. If global growth rebounds, the price of this fund is likely to fall, however, the equity positions held in the portfolio should gain to a far greater extent.

We will of course be watching events closely over the coming weeks and I shall write again if we feel that any further changes are required in the portfolios.

If you have any questions on the above, please do not hesitate to get in touch with us.

Kind regards
The Buckingham Gate Investment Committee

Investment Update – August 2019

Matthew Smith, Director of Buckingham Gate Chartered Financial Planners, provides his clients with an investment update for August 2019.

Headlines:

UK GDP Numbers

US/China Trade War

Possibility of a No-Deal Brexit

Markets Posting Impressive Gains Year-To-Date

The value of investments can rise as well as fall and you may not get back the full amount you invested. Income from investment is variable and not guaranteed. The statements in this video are for information only and are not designed to constitute personal advice. If you are unsure, you should seek advice from a qualified financial adviser.

The Only Constant Is Change

If you are anything like me, you will have been fascinated by the seemingly never-ending political surprises over the past few days, not least Boris Johnson’s decision to prorogue parliament.
All of this would make for fantastic watching if it were a political TV drama, but unfortunately it is real life.
In some people’s minds, Mr Johnson’s actions have made a general election more likely and by extension the prospect of a labour government more likely as well.
Many will use these potential changes on the horizon as an excuse not to take action on something. Not to invest. Not to get that updated will drawn up. No to [insert any other thing you might want to do here].
Although potential changes are always unsettling, it is important not to use them as an excuse for inaction. Because, the thing is, once one change has happened, there will always be another one on the horizon.
If we have a general election this year, who’s to say that there wont be one next year? (and in the current political climate, I wouldn’t bet against it). Once we have had this years budget, there will be the Spring statement and then next years budget.
There will always be changes on the horizon, but at some point we must act if we want to achieve anything.
I always say to clients that we must plan based on what we know today and then adapt and change the plan in the future when the inevitable changes happen!

The Balance of Life

“Life is what happens when your busy making other plans” – John Lennon

“I’m busy.”

“Work’s good thanks, it’s busy at the moment.”

“Sorry, we’re busy.”

As human beings we seem to be busy with our busyness and often, if it’s not managed properly, we get out of balance. We’re working too hard. We’re not seeing friends and family as much as we would like. We’re not enjoying the activities that give our lives fulfilment and energise us. We have no time to think – to think about what really matters most.

Achieving balance is a constant push and pull, and deep down you can feel when it is out of kilter. We must constantly reevaluate whether we have the right balance, if we’ve moved too far in one direction, or if we’ve given up on an element completely.

Every single person has a different definition of what they would consider balance. This evolves over different stages of life and as it evolves, so must the individual. My balance will not be the same as anyone else’s, although it may be similar. What constitutes as balance to me may be boredom to you. What I consider a balanced weekend – seeing friends, going to the gym, swimming with the kids, walking to a cafe, popping into my sister’s may be perceived as “too much going on” to someone else.

Friends, pastimes, family, work – when we get them in balance, we enjoy life. It is said that when you’re having fun in life, then you have struck some kind of balance. How many people do you know that have worked so hard for retirement that when they get there they don’t know what to do because working is all they’ve ever done? How many people do you know that are so busy supporting their family that they never actually see them?

Society has got better at addressing these issues and employers and employees are far more aware of work life balance than they were even 10 years ago.

At Buckingham Gate we’re in the business of having our clients reach the right balance.

We hope you have a lovely balanced week.

Tip The First Domino: How One Change Can Lead To A Happier Life

I (Kayleigh) read an article this week and wanted to share it with you. It was posted by Start Living Richly and as the title suggests it shows how one change in your life can create a domino effect resulting in a much happier life. You can read the full article here.

Maybe there could be a change in your life which you haven’t considered?

Maybe there is something you want to change but aren’t quite sure how to do it?

Or maybe you don’t have the confidence to make a change?

This is one of the reasons why I love working at Buckingham Gate. Buckingham Gate really care about our clients and their happiness. One of our biggest sources of pride is giving our clients the confidence to make a change. Whether it be to move house, quit their job, buy a new car or go travelling and so on.

If you think there is something that you might like to change in your life, please get in touch with us as we would be delighted to help you.

The Art Of The Possible

It occurs to me that as a Financial Planner, a large part of our job is to help people see what is possible.

We are often confronted with goals and desires that people believe are ‘impossible’.

“I want to retire at the age of 47 and go travelling”

“I want to quit my day job and start a new business that I love”

“I want to go on a 5 year round-the-world trip and write a travel book”

“I want to work just 3 days a week so that I can spend more time with my grandchildren”

“I want to gift my son and daughter £300,000 so they can finally buy a home of their own”

There are all real-life examples of ‘impossible’ objectives that Financial Planning has made possible.

Very often, the biggest barrier to making these things happen is us.

We get trapped in our own mis-conceptions about what might or might not be possible:

“People just don’t retire at the age of 47 – its not the done thing”

“If I work just 3 days a week surely I am just being lazy”

“If I make a big gift to my children, I might not be able to afford to retire”

We are often also terrified by what everyone else will think:

“What will my children say if I quit my job at the age of 47?”

“Will my friends think I am mad if I go travelling for 5 years?”

“My wife will think I am crazy if I walk away from my regular pay check to start a business that might not work out”

The truth of the matter is that other people are either; A – not that bothered by what you wish to do or B – more supportive than you might imagine.

Our own misconceptions are often just that – misconceptions.

With some creative thinking and planning almost any dream can be made a reality. I was reminded at our seminar last night of all the people we have helped to make the impossible possible!