If 2016 was the year when markets shook off political shocks, 2017 proved to be an eerily calm follow-up in which investors continued to profit from strongly rising markets. So what of 2018? Here, we summarise why we believe Saunderson House clients are well positioned to make the best of the year ahead from both a financial planning and investment perspective.
Concerns about a possible Labour government are top of many investors’ lists of potential disrupters after the strong gains of the past few years. We cannot predict but we can plan. Specifically – though hypothetically – we would expect a Corbyn-led government to focus on tax increases and a crackdown on tax avoidance schemes.
Clients of Saunderson House will be making regular use of the tax reliefs, allowances and exemptions available to them (through pensions, ISAs and General Investment Accounts) to soften the blow of the former, while we consistently encourage clients to steer clear of the latter. Our preference is for tax-efficiency through simple and transparent portfolios; we expect this approach to continue to benefit clients in 2018.
There is a perception that equity markets worldwide are leading a charmed life, and a fear that it is soon to come to an abrupt end.
It is fair to say that the ongoing withdrawal of supportive monetary policy is likely to continue, providing increased headwinds and possibly signalling the return of some level of volatility, and that the lowly valuations on equities during the post-crisis era are no longer available.
Nevertheless, we expect two of the traits that fuelled the bull market in 2017 – a synchronised pick-up in global growth coupled with a rise in corporate earnings – to continue to provide support for equity markets in 2018.
Our message is therefore one of cautious optimism: the ingredients for positive returns remain, but it is important to make sure that portfolios are carefully positioned and balanced, in anticipation of any challenges on the horizon.
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