INVESTMENT MARKET DIRECTION – HAS THE BOTTOM OF THE MARKET ALREADY CONCLUDED?
A strong rebound has developed to this point – following the annoyingly described ‘unprecedented’ falls in global equities – with bond sectors suffering also.
The S&P 500 has rebounded strongly – many are now suggesting this rally has been too strong, although supported by gigantic financial stimulus in both the UK and US, by the Central Banks.
If history is an indicator, the TMT bubble and Global Financial Crisis both saw big drops, a rally, another drop in asset prices and further volatility before hitting the bottom.
Each huge investment market event has been created by different issues – with the Covid-19 Global Pandemic being so severe that Government intervention is on the scale never seen before – and will remain to nurse the economy off life support – leading to investment market improvements.
Investors will need to be patient and calm, taking the long term view but again I say look at buying the dips for the long term. It is likely to be somewhat over optimistic to think the current rally will provide a deep V shaped recovery, without further bouts of volatility.
The markets are likely to take many months, if not a couple of years, to return to a level of normality, given the extent of the economic standstill and devastation to a number of sectors, such as leisure, travel, airlines and retail (High Street), along with Breweries.
Need for income returns
We have written recently about the need to replace lost dividends as we are seeing the dividends scrapped by many businesses at this time of the crisis. Interest rates were already eroding capital (buying power) over time.
The new level of interest rates ‘pushes’ investors to seek out a return from other products – such as Structured Deposit Accounts that are FSCS protected.
Can I urge you to read recent communication we have issued in relation to the investment markets and our results –
We also provided a summary of Investec’s new range of plans which include Structured Deposit Accounts. Click the link to read about Investec’s range of plans –
Structured Deposit Accounts
For those individuals, companies and charities who are looking to invest in uncertain times (protected in the event of issuer failure up to £85,000 for eligible investors) the Investec Structured Deposit Plans could be the ideal solution …… providing preservation of capital, plus the coupon, as long as the contract terms have been met at the contract termination or review/kick out point.
Firstly (for eligible investors) the initial deposit is fully protected at maturity (up to FSCS levels).
Secondly, the potential returns in relation to your initial deposit are clearly defined at outset.
Thirdly, the potential returns are net of all product charges.
Investec’s new plan range was launched on Monday and are expected to be in demand so if you think the plans meet your needs, take action early, as early closure could develop.
With rates up to 5% (simple) for a Fixed Term Deposit, against a Banking Deposit rate of next to zero, the rationale for the increasing move towards Structured Deposit Products is clear.
Other Income Plans
We are expecting another quality Income Plan to be issued shortly by a leading provider. We do not currently have the terms but we will provide details as soon as the product terms are available …..
As always, we must drop in our Regulatory statement.
Don’t Forget the Risks
As with all forms of investment there are risks involved. These plans do not guarantee to repay the money invested. The potential returns of the plans and repaying the money invested are linked to the level of the stock market and also depend on the financial stability of the Issuer and Counterparty Bank.
The promotion of the plans does not constitute ‘advice’ to invest. Advice is always specific to an individual investor’s circumstances and needs, following the process of ‘know your customer’, with the aim of ensuring that any product is suitable for an investor.
As always, the recommendation and common sense approach is to consider product solutions as a portfolio, never over-exposing oneself to a point of financial pain and suffering liquid or counterparty exposure.
At the Best Price FS price point, the Investec plans are certainly worthy of consideration for inclusion within investment portfolios.
Simply get in touch if you wish to receive regulated advice in relation to the ‘suitability of the plans to meet your investment needs’.
If you require advice in relation to your financial affairs simply get in touch.
Stay safe, stay healthy.
Best Price FS Team