Investment news is usually focused on long term potential. But we know our clients have diverse investment horizons, spanning short and medium, as well as longer terms. Here at Brooks, our focus lies in capitalising on opportunities and taking actions that positively influence our clients’ financial journeys whatever their time horizons.
Our view is that the investment landscape is currently filled with promising opportunities, and it’s time to embrace the evolving dynamics of cash, investments and risk.
Presently, cash rates are notably robust, exceeding 5% for fixed terms extending up to five years. This doesn’t imply the need for an all-in shift to cash, but rather a prudent consideration of short-term savings options. As advisers we often recommended a three-year cash strategy as a safeguard against investment volatility. However, with current rates, it may be worth considering allocating some funds towards cash holdings for up to five years. This may entail reallocating some of your investments into cash, but when interest rates do recede, be poised to reinvest quickly or miss ‘the bounce’.
Structured Products are becoming a compelling option. These specialist investment vehicles are promising impressive returns, such as a remarkable 37% over five years, complete with a steadfast 100% money-back guarantee even if conditions are not met. These products offer diversification for medium-term investments, with shorter-term alternatives and more adventurous capital at risk selections offering excellent potential returns.
Primarily for those in pension drawdown or considering retirement income options, annuities are now offering some value (but note, they are no longer exclusive to pension planning). Consider the possibility of a purchased life annuity. The rates are appealing, there are some tax breaks, but as with all things, it’s crucial to remember that they aren’t suitable for everyone.
Fixed interest investments are on the rise. Yields have improved owing to rising interest rates, and despite some declines in value, past rates continue to be honoured (which translates to proportionally higher returns now). There’s potential for these investments to rebound, offering robust yields and growth opportunities. Although single asset funds may have lost some of their lustre, they may still align with the goals of certain clients.
For a period, we’ve advocated a cautious approach to our clients, primarily due to the absence of compelling opportunities. However, the times have changed, and it’s time to diversify our approach. Positive news is on the horizon, and we are prepared to seize it. By proactively pursuing these opportunities, we can not only manage but also profit from potential setbacks.
We’ve encountered frustration as the world underwent political and economic shifts without yielding clear outcomes. While we remain cautious, we now possess sound strategies to navigate these challenges.
In the upcoming year, let’s harness these opportunities to our advantage. While we wholeheartedly believe in the long-term potential of investments, we also acknowledge that diversification into cash, structured products, shorter-term fixed interest, or annuities may be prudent for certain clients. We anticipate that the months ahead will bring forth further promising opportunities.
Here’s to a brighter financial future! The opportunities took their time to become obvious but we are frankly relived they have shown up.