Newsletter 2.0! January 2021

Financial Planning Wales Updates

Whilst we cannot stay in touch with you all and arrange to meet to discuss news and exchange ideas in the normal way don’t forget we are always available whether that is email, phone or video meeting; if you want to catch up with any of us then just give us a shout and we can pencil something in.

Hopefully you enjoy the new format of our Newsletter; we will send these to you directly each month and in the weeks between issues we will publish a market snapshot – if you have any suggestions or areas you would like us to cover let us know.

News from the Front

It seems clear that despite significant overvaluation on several measures that the US Stock Market is still heading upwards; investors remain complacent, failing to recognise the risk (or not caring) confident that the Federal Reserve will continue to print money to keep interest rates low and make shares attractive investments. Well respected commentators and experienced investors are regularly highlighting the signals that tell us the US Stock Market could be one of the biggest bubbles in history and we are even seeing the classic hallmark of a mania where misrepresentation starts to reveal itself.

At the end of last year is transpired that manufacturer Nikola’s hydrogen-fuel truck advert for investors did not mean that they had a working version it was in fact rolling down a hill! We are also seeing the rise of Special Purpose Acquisition Companies (SPACS) that attract investor with talk of what they will be buying; and for a 20% up front fee anyone can take part as long as they do not mind having no idea how their money will ultimately be invested!

However, what the US Stock Market still has is momentum and positive sentiment; investors continue to throw their money at it as the share price of firms in the Tech Sector (Facebook, Amazon, Apple, Netflix, Google etc) all benefit from the need to stay at home.

Whilst we want some access to this growth, that could continue for some time, we retain modest exposure to the US (5% at a maximum) that combined with tight risk controls should keep us safe if the mood changes.

Funds & Strategies We Like

Sarasin Food & Agriculture Opportunities

The aim of this fund is to provide growth though investment in companies around the world which have exposure to food and agriculture and sectors. The underlying drivers of growth in the global food economy remain positive: the rising incomes of middle-class consumers, urbanisation in developing countries and the need to feed any ever increasing population.

In the last 12 months, there has been an increasing trend to the use of online grocery and food delivery, which the Fund has positions in. These include recognisable names such as Ocado and Just Eat Takeaway. These holdings have benefitted from the acceleration of digitisation which has been a key driver in market growth in Q3 and Q4 of 2020.

Over the medium term, the fund is positioned to take advantage of continuing trends in rising living standards and a greater focus on health and wellness – this includes Beyond Meat which is a plant based meat company.

New technology has also led to productivity gains, changing consumer behaviour and new distribution channels.

The fund had a tough start to 2020 but has made a strong recovery since the lows of March

The challenges for the fund, in the near term at least, include positions in catering companies and food processing companies, where instances of COVID-19 have led to closures. However, with rollout of various vaccines in 2021 these challenges may diminish.

Ever Wondered What "The Gold Standard" is?

The Gold Standard links a country’s paper currency issued directly to Gold; if it applied in the UK then for every £1 of currency issued, the country would need to hold a fixed amount of Gold.

Britain stopped using the Gold Standard in 1931 and it was finally completely abandoned as a system in 1973 to be replaced by Fiat currency.

The Gold Standards appeal was that it stopped us from the potential risks (mainly inflation) of issuing too much currency; over time it was replaced by Sterling and the Dollar as reserve currencies as supplies of Gold fell behind economic growth, particularly in war time.

Financial Planning Ideas

A well-considered financial plan can allow you to take control of your finances and meet your objectives. Here are five concepts that we like to use to help you on your financial journey

We make sure any plans are SMART

  1. Specific – your objective should be specific to your circumstances.
  2. Measurable – how will you track your progress in meeting your goal.
  3. Achievable – make sure your objective is achievable within a specific timeframe.
  4. Realistic – choose a realistic objective.
  5. Timely – set a realistic timeframe to meet this objective.

Clear expensive debts first

Often unsecured debt can come with eye-watering rates of interest. In many instances, it can be difficult to achieve an investment return in higher than the cost of your borrowing taking on excessive investment risk

Take advantage of tax reliefs

ISA, Pensions, Capital Gains Tax, Income Tax and Inheritance Tax all have allowances or reliefs that can reduce taxation and improve net returns

Make a Will

Having a will can reduce the time and cost needed to deal with an Estate and can ensure your wealth is passed on as you intend - it can also help ensure wealth is passed on tax efficiently

Review your plan

A financial plan should not be left on a shelf to collect dust, it should be reviewed regularly and its success measured against your initial goals.

Interesting Reads & Listens

This section provides links to articles we have read or podcasts that we have listened to that we think you may also be interested in - click the buttons below to go to each one

We hope you enjoyed our Newsletter - head over the to the website if you are interested in finding out more about us or reading the publications we have posted over the last six years

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Financial Planning Wales Ltd is Authorised and Regulated by the Financial Services Authority. We may record or monitor phone calls for training and quality purposes.

The details and material published in this article should not be considered as advice and has been prepared for informational purposes only without regard to your individual investment objectives, financial situation or means