We Live in Unprecedented Times

This week, the highest commoner in the UK, the Speaker of the House of Commons, Mr Michael Martin, resigned. He is the first Speaker to be ousted in more than 300 years.

In January, the Bank of England cut interest rates to 0.5%, the lowest level in its 315 year history.

The US has unprecedented levels of debt….. and so the global financial crisis continues to unfold.

Stock markets have rallied considerably since their low at the beginning of March 2009.

Who can we believe, is there anyone we can trust anymore? What does this mean for the man in the street? What on earth do you do with your assets? Is your pension safe? Should you buy or sell your property?

These are all questions that I am being asked on a regular basis and I am going to attempt to answer them here.

Firstly, it is important to keep up with the daily inflow of news from around the world, but it is vital to trust your own intuition as far as your finances are concerned. If you do not feel comfortable with the advice your financial advisor is giving you – do some more research, maybe get a second opinion – but do not invest in something that you do not understand and in something that you are not comfortable with. So in answer to the first question – who can you trust? You must trust yourself and your instincts. If something feels wrong, it probably is. There are always plenty more deals out there. If a deal has to be rushed through – don’t do it. You need time to think and time to read the small print. Take that time and if the deal falls through – then another one will be along soon.

How can you protect your assets? This is proving difficult for both rich and poor around the world. My advice is that you must have some gold and silver in your portfolio – even if it is a small amount – this is insurance against the whole system failing – and that is a distinct possibility. This is not to alarm you – but just as you take out house insurance in case you have a fire – this is no different. The economy is on fire right now, and you need to hedge your bets. Gold has no national identity and is therefore international. It is a safe haven. It will continue to rise vastly in value, so not only is it insurance, it is an investment too. You must be aware that gold and silver are very volatile – so be prepared to ride out the short term dips – you must be prepared to hold for the medium to long-term.

Pensions are not safe. If you are soon going to be getting your pension – be prepared for a drop in its value. You may need to make alternative plans – but please do not rely on the pension you thought you would get. Because most pension plans are based on stock market performance – and given that the stock markets around the world are falling – the value of your pension is diminishing. This is heartbreaking and grossly unfair – and when all the baby-boomers start retiring – this is going to be a massive problem. Older people will either have to work longer – at least until age 70 – or they will be living on the breadline. I do not think that people were made aware enough that the value of their pensions could fall dramatically too. We had many good years, and people were led into a false sense of security. We are coming in for some very lean years, and you need to start to learn how to do more with less. Every penny that you spend – ask yourself – do I really need this??

Property is a huge issue that is on people’s minds. Buy, sell, mortgages, banks, what to do? It is hard to generalise about the world property market – as each country has its idiosyncrasies. However, if you can wait before buying a property at this time, it is advisable to wait. Prices are going to fall much further and it would be a shame to have invested your money and then only a few months later to find that you could have bought that same property for 20% less money. This is even more painful if you have taken out a mortgage on the property – because you may owe the bank more than it is worth. So, if you can, wait it out until the market becomes more stable. In the meantime, rent and bide your time. Don’t be too quick to get into the market. Just because something looks like a bargain – it might not be.

If you are selling your property or land – you must price it to sell quickly. The sooner you can sell your property, the better as prices are likely to fall further. So, don’t be greedy – it is better to lose some money and to get rid of the burden, than to have the responsibility around your neck maybe for years to come. In a falling market, you need to price your property about 10% lower than the lowest price in your area. Like that, you will at least get some interest and hopefully buyers who will bid against one another and raise the price. This is the best way to go with property.

I hope this answers a few of your questions. I will be back again with more soon.