Client trends September 2020:
Important points of investment strategy are preoccupying investors

Investors have a range of concerns in mind as they contemplate how well their portfolios are positioned for the rest of the year and beyond. Happily, they are being proactive about tackling risks, including heightened focus on estate planning too.

Users bracing for tax changes on the horizon

A worryingly broad sweep of tax hikes are being spoken of as possible ways the government is looking to plug the gaping hole in the public finances. Reductions to pension reliefs, an increase in Capital Gains Tax – potentially, alignment with Income Tax — and an ominous sounding “simplification” of the Inheritance Tax regime have got users worried about being hit on a number of fronts.

Although we will have to await the next Budget statement for definite answers, it is well worth taking advice on the potential impact of tax changes and making moves to protect your wealth ahead of time.

Worries over picking “winners”

Absent its usual diversions, this summer has given people far more time to ponder investment strategy – and the topic of how to pick winning stocks seems to have been on many investors’ minds.

In a widely publicised commentary, Goldman Sachs observed that just ten equities accounted for almost 25% of the of the S&P 500′s resurgence since March, to the point that the index’s top five tech firms now make up almost a quarter of its value. Apple (which recently became the world’s first $2 trillion company) and Tesla (which has doubled in value) led a roll call of stellar performers which have got many investors thinking “How can I pick winners like this?”

While it’s of course great to boost portfolio performance with outperformance wherever possible, you should be very wary of making highly concentrated calls

This is a vexed question, however. While it’s of course great to boost portfolio performance with outperformance wherever possible, you should be very wary of making highly concentrated calls. Success is about balancing risk and reward, timing, and aligning your asset allocation to your goals. Aim for a winning overall strategy, rather than picking winners, is our advice.

Investors ponder the consequences of the US elections

Our users are already showing an admirable focus on the wide-ranging implications likely to stem from this November’s US presidential election. That may be a way off, but experts are already advising investors to think about re-positioning their portfolios.

Elections in the biggest economy are always of massive importance to investors the world over, and particularly so in these most tumultuous of times. Whatever the outcome of US 2020, investors need to be braced for policy changes likely to affect everything from corporate performance to global tax trends.

Whatever the outcome of US 2020, investors need to be braced for policy changes likely to affect everything from corporate performance to global tax trends

Although a second term for Donald Trump should not be ruled out, a widely predicted Democrat landslide could see the US transformed. Equities could be hit hard, even to the extent of technology behemoths (the coronavirus winners so much on investors’ minds) being broken up. Reviewing your portfolio strategy well ahead of time could be your best ever defensive move, so have yours checked while there is still time to take meaningful action.

Reviewing your portfolio strategy well ahead of time could be your best ever defensive move, so have yours checked while there is still time to take meaningful action

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Top Tip

There is an abundance of guidance out there on portfolio strategy, but melding together all these into a coherent approach is no easy task – and certainly not in the fast-moving environment we find ourselves in. Even the investment experts work as part of a team and you may find that going it alone works out to be a false economy. You may be surprised what discussing your portfolio with a professional will reveal, and we can match you to one fast and free of charge.
Lee Goggin - Co-Founder

Lee Goggin

Co-Founder

Alternatives allocations a top question

Another question which keeps coming up from our users is how much – if any – of their portfolio should be allocated to alternative investments (those outside the traditional asset classes of stocks, bonds and cash).

Driving this thinking has been the meteoric rise of gold and Bitcoin, with both of being seen as hedges against possible inflation, but the question is one that investors generally grapple with. Alternatives cover everything from commodities and property through to art and collectibles, thus fulfilling a plethora of purposes in portfolio strategy – namely in diversifying risk and boosting returns.

The exact proportion and type of alternatives exposure you could usefully have in your portfolio is a highly individual question, and the nuances of these investments certainly call for expert guidance too

The exact proportion and type of alternatives exposure you could usefully have in your portfolio is a highly individual question, and the nuances of these investments certainly call for expert guidance too. Why not speak to an expert free of charge to see how broadening your investment horizons could further your goals?

A sensible focus on wills and estate planning

The pandemic has undeniably got more of us thinking about our mortality. Alongside the crisis itself has been widespread speculation about potential rises to Inheritance Tax as the government attempts to tackle the country’s now enormous debt levels. Combined, these concerns have prompted a marked rise in enquiries from affluent individuals related to estate planning.

It’s been great to see the peace of mind our users have been gaining through getting proactive on this front – not to mention the tax-efficiencies they have secured. As this recent case study illustrates, the savings families can make are often immense.

Shockingly, research suggests that a third or more of Britons wait until they are over 65 before making a will at all, let alone making planning moves to limit the tax liabilities on their estate

Unfortunately, our users stand in stark contrast to the majority of people. Shockingly, research suggests that a third or more of Britons wait until they are over 65 before making a will at all, let alone making planning moves to limit the tax liabilities on their estate. There is a huge amount you can legitimately do to keep as much money as possible with loved ones, yet taking action as early as possible is key. Many of the wealth managers on our panel act as one-stop-shops for both investment and financial planning advice. Speak to our expert team to find out exactly which services will yield the very best results for your family.

Do these concerns chime with you?

An unusually contemplative summer has led to a record-breaking period for enquiries, and we are delighted to see so many people taking control of portfolio strategy and financial planning issues in good time. They stand to make and/or save substantial amounts by taking the initiative.

If you are clear about the areas where you need expert guidance, then use our smart matching tool to find your best-matched advisers in minutes. Alternatively, for an informal, exploratory discussion, get in touch with our expert team to discover all the ways the leading wealth managers on our panel could help. 

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