Our Gambling Government and More...
16 January 2025
To all financial friends
As echoed in my recent commentaries, our government is gambling with our economy in ways which will affect all of us. Borrowing significantly more money to plough into hoped for 'capital projects' to achieve growth, is the aim. Should this strategy succeed, we are all better off. If it fails, then its best not to think about it. Plan for the worst and hope for the best seems the right course of action?
As the global economy looks at the UK it feels uncertain, so sterling falls in value against other currencies. Lending money to the UK is seen as less safe than it was perceived to be previously. This means that the interest rate required by lenders to the UK government rises. Long term debt will cost us interest above 5%. As I write, the 10 year benchmark gilt stands at a yield of 4.87%. These are high levels.
So what you ask? More of what we earn and pay in taxes has to go on paying high interest on our debt. This means less money providing the services we take for granted. We will need more from our investments to provide for us what the public purse may no longer afford.
More Important Than Ever to Make Your Money Work and Earn For You
This background means there is less to pay for public services and the things we take for granted. In the end we each have to stand on our own financial feet more and more. That's why I am glad you are a Financial Friend investing your money. Being investment aware and prudently active, means your money can work for you and make profit to support your lifestyle throughout.
So How Have Financial Friends Been Doing?
The main assets held by our students have preformed as follows over just the last 12 months.
Gold & Silver +46.02% American Equities +36.58% Global Technology +34.62% Global Infrastructure +13.08% UK Equity +8.86% Multi Asset +7.75% Natural Resources +7.23% Corporate Bond +2.55% Global Bond -0.18% Index Linked Gilts -4.37% UK Infrastructure -7.61%
A student holding equal amounts across all these sectors would have gained an average return of +13.14% over the last 12 months to 14/01/25 The very recent market turmoil caused by Rachel Reeves budget triggered UK funds to fall in the last month. Israel/Hamas potential ceasefire caused the UK FTSE 100 index to rise today.
Financial Friends latest commentaries have outlined the risks to the global economy and pointed out the likelihood of a coming considerable global market correction. The UK is not alone in it's struggle for growth. Other economies, like France and Germany are in significant trouble. Trump's tariffs might boost (or not) the American economy, but may disturb the world economy.
Financial Friends strategies will help you consider whether you might turn profit out of volatility as global uncertainty continues.
There Is Always Money to Be Made in the Global Stockmarkets
All of this said, whatever unfolds, there is always money to be made in the global stockmarkets. Wherever the money goes, whatever assets it invests in rises in value. Defensive holdings in troubled times are likely to rise in value. As sterling falls, gold again rises to all time high values. Should worries increase and people's disposable income reduce, consumer staple holdings could be considered. Infrastructure funds are a consideration. Money market funds are very much a safe haven. Well managed 'total return funds' have the ability to achieve growth in all market circumstances.
I have attached previous writings entitled 'Today's world and your strategy ' where you can consider, or create your own best strategy, whether you are defensive or going for growth or choosing diversification to moderate risk. 'The world in turmoil' article is also attached, although amended to point out the likelihood of the change in direction of interest rates and inflation upwards instead of downwards. This is as a result mainly of Rachel Reeves budget.
