How I changed my investment strategy

Don’t panic. I have not made wholesale changes but I have made some precautionary changes, mainly to reduce risk a little.

First a disclosure. I am no longer a regulated Financial Adviser so nothing which follows should be taken as personal advice. However I was a regulated adviser for more than 30 years so what follows is based on many years of experience in guiding clients through their investment strategies at times of uncertainty, oil crisis, dot com crashes, recession, and goodness knows what else. What is slightly different this time around is that I am semi-retired and drawing on my pension fund so this is no longer theory. It is what I am doing to protect myself.

Until ten days ago I was comfortable that a “stay in” EU referendum result was likely which would probably mean the return to positive stock market performance, not forgetting the inevitable daily fluctuations. Today I am much more nervous about the outcome regardless of what the polls and bookies tell us.

So what am I doing about it?

Let’s go back to the starting point for all sensible investment strategies.

That is the number one risk control strategy.  So my first step was to check that my cash reserves were still adequate – and I have gone beyond that by moving the time scale out to three years.

Secondly I have looked at my pension fund and made absolutely sure that I will not need to sell any equity type funds to fund my planned withdrawals for three years (also up from two years). If you are selling funds every month to meet income needs you are in a high risk situation whatever your adviser tells you.

Thirdly I have looked at my overall strategy and monitoring process to make sure everything else is working as it should do.

I still expect clients to ask me:

if you are that nervous why don’t you move everything back into cash?

The answer is that I am still a firm “buy and hold” advocate. Making a decision to put everything in cash is easy. What is far more difficult is making the re-investment decision when everyone around you is full of gloom and despondency.

Those few clients who over the years have insisted on selling everything when things were looking bad have finished up losing money. Why? Well the answer is they have only re-invested when their confidence has returned – without exception, at above the level at which they sold.

Those of you who read my regular blogs know I have one primary message.

This, I think, is just one of those “pay attention” times. Not massive risks but you may need time on your side whichever way the vote goes. We could be in for a period of uncertainty and there is nothing stock markets hate more than uncertainty.

So just take the time to make sure you don’t have short term money exposed to stock market fluctuations. If you are paying annual fees to a financial adviser ask what he/she thinks and if you don’t get a good answer ask yourself, what am I paying for?

Once again this is not personal advice. However, if you would like a little more guidance or would like someone to talk your situation through with please pop your details in the request more info box or phone me on 07770 575122.

I would love some feedback. Sometimes I think I must be talking to myself and then someone says something which shows they have been paying attention and it’s all worthwhile.