Investing is about perspective..how would you react if official interest rates fell below 2%?
Saturday, 18 October 2008
I wonder if in the Diary of Samuel Pepys, there was a discussion about interest rates following the Royal Charter being granted to the Bank of England on July 27 1694. If not in the diary's of numerous investors in 2008 it will have plenty of mentions.
One leading economist believes the Bank of England may have to drop rates below 2%, and they could fall to the lowest level for 300 years….1694 to be exact, say the Daily Telegraph
Great news for borrowers, disastrous news for savers!
Whilst we do not believe in crystal ball gazing, it is clear we are in uncharted territory. If interest rates did fall below 2%, it will have an impact on bond prices and equities..all assets classes will react positively or negatively as the economy is all interrelated. Savers may then consider buying bonds or even equities…a demand for either could drive prices upwards. All speculation I know, but trying to second guess what will happen is a futile or unprofitable endeavour or eloquently called a 'mugs game'.
My point is that trying to predict when the right time to react to macro economic factors is likely to be almost impossible for most people. If instead savers and investors had diversified their holdings subject to their risk profile, they can then ignore macro factors. They can look forward to a well balanced portfolio, which means you are much more likely to have a successful investment experience over time.
We hope investors take notice and put their own house in order first without trying to react to Gordon Browns’ house, or George Bush’s house….as these people only take responsibility for the economy for a short time, you take responsibility for life.
posted by Murray Round Wealth Management @ 10:13,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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