Your New Year Investment Focus

With a series of shocks impacting markets, the last 12 months have been challenging for investors. As the new year embeds, although uncertainties remain, one constant on the investment horizon is the necessity to be strategic with your portfolio. Developing a sound strategy and making purposeful decisions, based on thorough research and reliable processes, will help put you on the front foot in 2023.

A combination of rising interest rates, high inflation and the Ukraine invasion presented challenges; consequently, markets struggled with bouts of volatility last year. Fund inflows slowed and, overall, cash as a percentage of investors’ portfolios rose. This triggered warnings that investors need to be aware of limitations to the Financial Services Compensation Scheme (FSCS) for cash balances.

Seizing opportunities

People with the capacity to invest should consider adding back into their portfolios to take advantage of any potential low valuations. Tackling inflation head on In the current economic climate, those holding a large proportion of their assets in cash, even with savings rates improving, will inevitably see the value of their wealth reduce in real terms. Essentially, equities offer a better potential defence in the battle with inflation.

A carefully considered strategy

Adapting your mindset and focusing on investment strategy rather than market sentiment is key. Stock market investing clearly involves a level of risk but the adoption of a carefully considered strategy based on sound financial planning principles undoubtedly offers investors the best chance of success.