Gold is a safe asset that has been around for centuries, and with its ability to help preserve wealth in times of economic uncertainty, it can provide many benefits for those looking to build up their savings and hedge against market volatility. In this blog post, we'll take a look at why gold investment is an important part of creating a balanced portfolio, as well as what kind of strategies can make it successful. 

We'll discuss how gold's performance measures up to other assets such as stocks and bonds, offer insight into where you buy gold from and give advice on when is the best time to invest in it. Read on if you want to learn more about using precious metal investments as part of your overall strategy for securing long-term growth!

Overview of gold as an investment asset and its benefits 

Gold has been a sought-after precious metal for centuries, not only for its aesthetic appeal but also for its value. Investors worldwide value gold as a safe asset, due to its ability to hold its value even during times of economic uncertainty. Unlike stocks or mutual funds, gold is a physical asset that can be held and stored, making it an attractive option for those who prefer tangible investments. 

Additionally, gold is widely recognized and accepted globally, making it an easy asset to liquidate if needed. With its stability and consistent track record, it's no wonder why many investors choose to include gold in their investment portfolios.

The importance of diversifying your financial portfolio with gold investments 

Investing in gold has proven to be a smart decision for many savvy investors. It's not uncommon to hear financial experts suggest diversifying your portfolio with gold. Why? Well, gold is considered a safe asset in times of economic uncertainty. It can act as a hedge against inflation and even currency fluctuations. 

Unlike stocks or bonds, gold doesn't necessarily rely on the success of a particular company or government, making it a valuable addition to any portfolio. By diversifying your investments with gold, you're spreading out your risk, which can help protect your wealth over the long run. With all of the benefits that come with investing in gold, it's certainly worth considering as part of your overall financial strategy.

Researching Gold Investment Options

With so many gold investment options available, where do you begin? A good place to start is by researching the different types of gold investments, such as physical gold, exchange-traded funds (ETFs), and mining stocks. 

It's also important to understand the risks and benefits associated with each option. When it comes to investing in gold, many investors choose to do so through a precious metals IRA. In this case, it's important to find reputable precious metals IRA companies that can help guide you through the process and ensure your investment is secure. Overall, with the right knowledge and reputable guidance, investing in gold can be a lucrative addition to your investment portfolio.

Investing in Digital Gold – Exchange Traded Funds (ETFs)

Exchange-traded funds (ETFs) offer a convenient and accessible option for investors when it comes to investing in digital gold. With the emergence of cryptocurrencies, digital gold has gained traction as a valuable alternative to traditional gold. Unlike traditional gold, digital gold can be easily traded and stored, making it an efficient investment option for those who seek to diversify their portfolios. 

ETFs provide a low-cost way to invest in digital gold, with the added benefits of liquidity and the ability to trade on major exchanges. Digital gold ETFs offer investors a chance to participate in the growing market of digital assets and should be considered a valuable addition to investment strategies.

In the end, gold is an attractive investment option for investors seeking to diversify their financial portfolios and protect against the risk of inflation. Investing in gold has several advantages but it’s important to take into account the potential risks involved in making a gold investment. Before deciding to invest in gold, it is important to understand the various investment options available as well as the pros and cons associated with each. 

Whether you choose physical gold through bullion coins or bars, digital gold through ETFs, or any combination thereof, make sure you do your research and weigh your options thoroughly so that you can make an informed decision that best meets your financial objectives. So go out there and start investing in gold today to secure a brighter tomorrow for yourself!

Are you looking for ways to make your money work harder for you? If so, you may want to look into alternative investments. When it comes to investing, there are a lot of options out there. You can invest in stocks, bonds, real estate, and other options. However, if you're looking for something a little outside the box, you may want to consider alternative investments. These investments can provide you with unique benefits you won't find elsewhere. In this article, we will discuss the main reasons why you should look into alternative investments. Let's get started.

Lower Volatility

One of the main reasons to consider alternative investments is that they can offer you lower volatility. Volatility is a measure of how much the value of an asset fluctuates. When it comes to investments, you want to find something that will offer you stability. With these alternatives, you can get just that. These types of investments are less likely to experience sudden drastic changes. This means that you can feel confident knowing your money is in a safe place.

Alternative investments have lower volatility because they are not as affected by the stock market. For example, if the stock market crashes, your alternative investments will not be as affected. This is because they are not directly tied to the stock market. You will enjoy greater stability and peace of mind with these investments.

Higher Returns

Are you looking for an investment that can offer you higher returns? If so, you should consider alternative investments. These types of investments can offer you the potential for higher returns than traditional options. For example, if you invest in a stock, you may only make a few per cent each year. However, with an alternative investment, you could potentially make much more. This is because these investments are not as well-known.

As a result, they are often undervalued. This means that you can get in on these investments at a lower price and enjoy greater returns when they increase in value. So, if you're looking for an investment with the potential to offer you higher returns, alternative investments may be the way to go.

Diversification

Another reason to consider alternative investments is diversification. When you diversify your portfolio, you are spreading out your risk. If one investment goes sour, your entire portfolio doesn't have to suffer. This is important because it can help weather any storms that may come your way.

With alternative investments, you can diversify your portfolio in a way you couldn't with traditional options. For example, if you invest in real estate, you are investing in a physical asset. This offers you a level of diversification you couldn't get with stocks or other paper assets. As a result, you can protect your portfolio from any unforeseen events.

Direct Ownership

Another advantage of alternative investments is that you can enjoy direct ownership. When you invest in stocks or other traditional assets, you entrust your money to someone else. You have no control over what they do with your investment. However, with alternative investments, you can enjoy direct ownership.

For example, you will be in control if you invest in real estate. You will be the one making decisions about what to do with the property. This means you can reap all the benefits of your investment. You won't have to worry about someone else mismanaging your money. You can easily change your investment strategy if you feel it isn't working. You do not have to depend or rely on anyone else when you invest in these alternatives.

Direct Tax Benefits

Alternative investments can also offer you direct tax benefits. For example, if you invest in real estate, you can deduct certain expenses from your taxes. These deductions can include things like repairs, insurance, and property taxes. This can help you save a significant amount of money come tax time.

A good example is when you are looking to invest in a vacation rental property. You can list the property on Airbnb and make money when people rent it out. Not only will you earn income from the rental, but you can also deduct expenses related to the property. This can help you save a lot of money come tax time. You only need to make sure you keep good records of your expenses.

Passive Investments

Are you engaged in a lot of other activities? Do you have a full-time job or a family to take care of? If so, you may not have much time to devote to your investments. This is where passive investments can be helpful. With these types of investments, you can enjoy returns without putting in much work.

Alternative investments do not require you to be actively involved in earning a return. For example, if you are a real estate investor, you don't need to do much once it's up and running. You can simply collect the rent each month and enjoy the returns. This is a great way to invest if you don't have much time to devote to your portfolio. Also, it can be a great way to earn extra income.

Strong Income

Most investors are in the market to earn a return on their investment. With alternative investments, you can enjoy a strong income. This is because these assets tend to appreciate in value over time. For example, if you invest in a rental property, the property's value is likely to go up over time.

This appreciation can provide you with a strong income stream. You can sell the property for a profit or use it as collateral for a loan. This can give you the opportunity to invest in other assets or simply enjoy the extra income. So if you are looking for an investment that can provide you with a strong income, alternative investments may be the right choice for you.

These are just a few reasons you should consider alternative investments. These investments can offer you diversification, direct ownership, tax benefits, and a strong income. So if you are looking for an investment that can offer you all of these things, be sure to consider alternative investments. You may be surprised at how well they can perform. Start your research today, and you can earn a strong return from these unique investments.

Worsening global supply chain disruption is one of the conflict’s most significant consequences for businesses. In fact, Moody’s has highlighted that the war in Ukraine has replaced COVID-19 as the most considerable risk confronting the global supply chain. Of course, this comes as no great surprise, considering that approximately 15,000 China-Europe freight train trips were made in 2021, with many of these trade routes running across Russia and Ukraine. 

The disruption and rerouting of these trade routes due to the war is leading to further chaos across the supply chain and this has massive implications for SMEs, which face tremendous supply chain challenges. Even before the war, almost two-thirds of UK SME manufacturers had already reported concerns that material supply shortage could impede their output. The conflict is serving to exacerbate these problems.

The need for supply chain redesign imminent

Tackling crippling supply chain challenges would require businesses to shift away from existing models that relied on lean inventories and just-in-time delivery. With this in mind, many companies are now looking at ways to build up and store inventory reserves to prepare for supply chain shocks in the future. The difficulty, however, is that while this mitigates the impact of disruptions to future production and improves supply chain resilience, it ties up valuable working capital. Moreover, these "safety stocks" can also risk obsolescence due to technological advancements or changing customer demands, which leads to precious resources, waste, and lost revenue, if not managed carefully. 

At the same time, larger organisations have begun to scrutinise their entire network of suppliers to identify potential critical bottlenecks. With the ongoing supply chain disruption, excessive reliance on specialist suppliers or suppliers in the exact locations created a knock-on effect that delayed production down the line. Unfortunately, this puts everyone in the supply chain at greater risk and consequently, these organisations are expected to diversify their network to strengthen their resilience.

The push for diversification presents both an opportunity and a challenge for SMEs.

While more MNCs are expected to decentralise their supply network to mitigate risk exposure, they will also likely set stringent criteria for SMEs to demonstrate strong business and financial fundamentals.

The need for liquidity and risk mitigation through trade financing

To assemble a well-stocked inventory and devise a strategy to sustain production during future disruptions, SMEs need to identify and unlock alternative funding sources to ensure resilient cash flows. 

Many are already suffering from high debt burdens due to the pandemic and, in addition, the war and the subsequent sanctions have caused soaring inflation and surging energy prices, exacerbating their financial challenges. This dramatically raises SMEs’ operational costs and worsens their liquidity crunch. 

The uncertainty of macroeconomic recovery due to the war in Ukraine has also led to investors remaining cautious and banks focusing their funding on more conservative, established relationships. 

The "flight to quality" has left many worthy businesses — particularly SMEs — with limited options for trade finance. Smaller companies are often unable to prove creditworthiness or show additional collateral required by banks to mitigate the risk of SME lending under the traditional banking system. Some may also resort to self-financing, which results in more significant cash flow challenges in a sustained crisis.

A recent survey Asian Development Bank (ADB) showed the global trade finance gap grew to an all-time high of US$1.7 trillion in 2020, a 15% increase from 2018. Despite the universal acknowledgement that SMEs are vital to economic prosperity and macroeconomic growth, they accounted for 40% of rejected trade finance requests. Without the short-term liquidity and risk mitigation provided by trade finance, buyers and sellers will be impeded in their efforts to tap into traded goods for recovery. 

One option SMEs can consider is a non-recourse approach for off-balance-sheet financing, which essentially takes away the burden of loans. Suppliers can leverage platforms, such as Incomlend's global invoice financing marketplace, to ask for early payment from their customers via a third-party financier. In effect, they are selling their invoice and obtaining finance without risk. It reduces the risk of late payments and bad debts – an option that would not be offered with traditional banking.

Buyers can also tap similar options by allowing buyers to optimise their cash conversion cycle and extend their payables due date to suppliers, freeing up working capital that would otherwise be trapped in the supply chain. 

Unlike commercial lending or dynamic discounting, such off-balance-sheet financing options allow SMEs to keep a low debt-to-equity ratio and preserve their borrowing capacity while diversifying their access to funding and reducing their reliance on traditional financial institutions. It also helps them mitigate the risk of their receivables and build up economic resilience in these volatile times. 

Hunkering down for uncertain times

Without an end to the conflict in Ukraine, many SMEs will need to build up their resilience and prepare themselves for prolonged volatility. During this period, SMEs in Europe will be challenged to transform their supply chain to buffer against ongoing disruptions and increase their working capital to remain fiscally agile in these uncertain times. These drivers will increase interest in receivables as an asset class among the SME community. They will look for more ways to manage risk in their trade processes and improve liquidity to weather through the storm.   

About the author: Morgan Terigi is CEO and Co-Founder of Incomlend.

Starting a new business can be one of the most exciting ventures you pursue in life. The benefits of running your own enterprise include being your own boss and having the flexibility to schedule work around your family responsibilities. However, the perks of being a business owner comes with its own set of risks.

Statistics show that about half of new businesses stop operating within the first five years. While this is quite a sobering reality, it shouldn’t put you off pursuing your business dreams. If you are able to learn from the experiences of others who’ve pursued this path, there’s no reason why you shouldn’t be able to achieve your goals and become a success. Here are a few handy tips to help new business owners get off on the right footing.

Research is Important

Before you get going, do your research. Find out about your competition, marketing platforms and industry trends. Remember that things in the business world change constantly, so it is important to stay ahead of the trends. Furthermore, in this digital age having a strong social media presence is another key factor in a businesses success.

Establish a Business Plan Early

Regardless of how small your business may be, you need a business plan which includes a detailed financial report. The importance of proper financial management is essential in ensuring business survival in this highly competitive environment. Ensure you have a little financial cushioning to carry you through the slower months. If you don’t have a head for numbers, it is worth enlisting the services of an accountant to help you manage the financial aspects of your venture.

Make Connections

Remember that people like doing business with people they know, so get networking. Whether this means attending conferences, joining industry associations or signing up to online forums, meet as many people as you can because you never know where you’ll find your next customer or business partner. The more people you connect with, the more exposure you’ll get for your enterprise.

[ymal]

Be Pragmatic

Things won’t always go to plan in the business world, so as an entrepreneur being a pragmatist is important. Remember your initial idea may not be as lucrative as you once thought, so be willing to change it as you go along. You’ll also need to be realistic and come to terms with the fact that you have your limitations so stay humble and make necessary changes to meet the needs of your market.

Diversity

Placing all your eggs in one basket is never a good idea. Regardless of the product you are offering it is important to explore other services that can be used to attract new clients and retain existing clientele. For instance, if you run a restaurant, expanding to provide a delivery service by introducing a kitchen management system could serve to broaden your target market.

Setting up a business requires a lot of hard work and dedication. You’ll need to mentally prepare yourself for the fact that there will be tough times ahead. However, if you believe you have what it takes to succeed, follow these useful tips to ensure you launch a resilient enterprise that stands a chance of thriving in this ever-changing world.

Now we know that certain businesses can be seen as nonessential, and in such a large-scale health crisis such as the one we are in now, some are practically deemed obsolete. Those that suffered the worst are the travel, retail, restaurant, and events industries.

The anxiety that this has caused individuals the world over is unprecedented. Those who had enough emergency money stored up could pull through the uncertainty of the months ahead without a hitch. Now, the money garnered from employment is as unreliable as rain in a drought – as most companies from affected industries have enacted pay cuts, forced leaves – some have even declared themselves bankrupt.

It’s high time that you take a look at your finances too, and assess if you have been efficient in your investment decisions in the recent years. Now, more than ever, saving up for a rainy day is vital to tide you over and even keep your sanity in the middle of the large-scale ambiguity we are all living through now.

Here are some reminders on how to be wise about your investment decisions, no matter if you’re only beginning or have been in the business for quite a while:

1. Make sure to have an emergency fund stored up

Common wisdom is to have at least six months' worth of your income stored up as liquid in case any immediate spending is necessary. This should be the first thing you have in your portfolio in order to help you pull through when economic uncertainties inevitably hit.

2. Educate yourself on options that you can afford

There are many different ways you can invest – such as time deposits, government bonds, stocks, dividend-paying stocks, real estate, and money market accounts, among myriad others. Create a goal to build your portfolio, take into account all the risks and returns of each instrument, and diversify your mix. This will ensure more security for you in case of fluctuations in value.

[ymal]

3. Do your due diligence on whichever kind of instrument you choose

It is best to consult with an experienced broker of any of the instruments you wish to put your money on, so that you can get a better feel of which one is best for you. Do not be fooled by market insights, payout ratios, and other seemingly promising percentages that can blind your decisions. These numbers may mean something different from what they connote.

One route people choose to ensure high returns even with low initial investment is going for stock investing with accompanying dividend payouts. A dividend stock screener can help you understand the payout ratios, a company’s stability over time, growth rate, and other things that are important in making your decision.

4. Diversify across industries

As we can all see, industries that were soaring in profits for decades have now gone down. No matter how tempted you are to get into a fad that seems promising, make sure to keep a diverse mix across industries. This will help protect you from any unpredictable downturns that may come your way.

Keep these tips in mind as you move forward with your investment decisions. They may be conservative, but they will help you have a solid fallback that you can rely on when the salary or income you may have relied on each month becomes compromised.

The coronavirus pandemic is spreading fear around the world, and while countries are doing everything they can to stop COVID-19 in its tracks with travel bans and lockdowns, the financial markets are taking a hit. By now, it has become obvious that we are headed for another recession and the longer it takes to get control of the virus, the more intense the recession will get.

Therefore, it’s about time that we all do what we can to protect ourselves and our finances as much as we can. Luckily, there are several ways that you can adjust your portfolio to better protect it for the looming recession.

With the help of some financial analysts, we decided to evaluate and list seven of those methods.

1. Cash

Cash is one of the best and safest ways to store funds during a recession. It’s also a great method to ensure that you can buy stocks when the market turns or a great opportunity presents itself such as the plummeting of a usually stable stock that will likely bounce back.

Keep in mind that you don’t want to keep all your funds in cash and that you have to combine it with other traditional investments. You should also not expect to make any profits from your cash holdings.

2. Commodities

Commodities and especially gold are known as “safe havens” during global financial struggles. It’s well-known that many stock investors allocate their funds to gold when the stock market falls which, in turn, often results in the price of gold surging.

There are also good ETFs and other commodities that you can place your funds in as long as you analyse them properly. For example, during other recessions, oil has been a good investment but that is not the case this time around.

It’s well-known that many stock investors allocate their funds to gold when the stock market falls which, in turn, often results in the price of gold surging.

3. High-quality Bonds

Historically, high-quality bonds such as the U.S. Treasury bonds have been the best-performing assets during recessions. The reason for this is that bonds, similar to commodities, are considered “safe havens”.

Better yet, bonds tend to provide higher returns for investors than cash and even commodities.

4. Stable Stocks with Dividends

Not all stocks are affected the same way during a recession, and some tend to survive on their own without influence from the regular economic cycle. In fact, if we look back at the latest recessions, we can find stocks that have continued growing.

Furthermore, stable stocks with great dividends act as an additional safety net that gives you as an investor increase liquidity and the ability to continue investing and making a profit.

5. Preferred Stocks

Preferred stocks are a hybrid stock with equal parts equity and debt components which, when placed right, are some of the best types of investments during a financial collapse.

With that said, this can be a risky investment and you have to be very careful. Certain companies can look much better on paper than in real life making them even riskier than regular stock investments.

In addition, preferred stocks as best suited for smaller investments and investors with limited funds.

[ymal]

6. Emerging Markets

Never lose sight of emerging markets and never stop prioritizing growth. Even during a major recession, there are usually certain markets that continue to thrive. In some cases, new markets start emerging because of the recession.

This often requires you looking for international investments and markets that you normally wouldn’t be analysing.

7. Diversification Is the Best Defence

Lastly, keep in mind that diversification is the best protection against a recession. Never keep all your eggs in one basket and try to spread your investments across several markets.

For example, most experts advise us to not place more than 5% of our funds in commodities unless we have a specific strategy, and preferred stocks shouldn’t make up a majority of anyone’s portfolio.

One Last Tip

Another method that should not be overlooked is short trading. By developing a solid strategy for how your best bet against the market, you can continue making great returns even as the market falls.

Now, most regular brokers allow you to short trade certain assets to a predetermined level but often start limiting the options when a recession starts. Therefore, we recommend that you look into short trading assets using online brokers.

An ETF, or exchange-traded fund, is currently among the best securities to possess. That's because ETFs cost less money to acquire and give you the option to consider other investment vehicles. In this sense, an ETF allows you to open up other profitable areas, especially in the financial, tech, and commodities sector.

It's only a matter of knowing how to diversify your ETF portfolio. However, this can also be challenging for first-time investors who normally think that having the greatest number of small investments gives the greatest benefit. But overdiversification can also be problematic since it doesn't guarantee investors their projected yields.

Then again, there's a right way of structuring an ETF portfolio to avoid encountering pitfalls along the way. Here's a guide to help you diversify your ETF the right way.

Pick the right types of assets

First off, you need to choose ETFs that are stable. In other words, choose only those that have a stellar record of high yields in the past. You may also look into the cost of acquiring an ETF as not all of them are affordable. But the most critical part of choosing an ETF is knowing what stocks and investment vehicles can be accessed once you have purchased an ETF that tracks a specific index and has a high exposure to top-performing holdings such as Amazon. One good strategy for beginners who are looking to diversify their portfolios is to consider broader indices to reduce risk.

Choose a trustworthy provider

It's not enough to determine the specific asset classes you want to focus on. You may also need to look at the institutions that are selling ETFs without confusing first-time investors. This is important since you need to be aware of the terms of the ETF sale so you can structure your investment strategy better. You will need all the information you can get. So, be sure to request relevant information that's easily understood from an ETF provider. Such information will be crucial when you compare ETFs with each other. From there, it becomes easier to find an institution that gives you everything you need to make your choice.

[ymal]

Cross borders

There are a plethora of ways you can go about building your diversification strategy. But the best way is to never concentrate on specific companies or industries where your money is sure to grow. That said, make sure to look at other companies, market segments, asset classes, and geographical clusters so you water down the risk of losing all of your money.

Automate your portfolio

As you include more asset classes, companies, and locations to your ETF, managing your portfolio becomes more complicated over time. Luckily, there are portfolio solutions out there that can help with rebalancing and evaluating low-cost funds all while reducing your tax losses. Robo advisors have become particularly useful for people who either have no time to manage their portfolios themselves or get someone to manage an increasingly diverse mix of bonds and stocks. Betterment, for instance, allows for tax-efficient rebalancing and automated asset allocation that give investors an increase of 1.48% in returns. When it comes to choosing the right platform for automating your portfolio, pick one that has all the right features.

Managing an ETF shouldn't be that hard once you get around the technicalities. The success of your ETF portfolio will also depend on the decisions you make, so make sure to apply the tips above and start enjoying passive income!

Importantly, the political situation does not accurately reflect the current state of affairs in other sectors of the economy. Jerald Solis, Business Development and Acquisitions Director at Experience Invest works closely with international investors, and he says it’s reassuring to see that UK property, be it commercial or residential, is still held in high regard.

In the first half of 2017, and less than a year following the EU referendum, the UK made up 14% of global commercial property investment transactions. This was second only to the US and tells us that international investors evidently were not letting the prospect of Brexit impact their long-term real estate investment strategies. Meanwhile, total investment volumes into the UK’s multifamily residential sector rose by more than 150% to reach $7.6 billion in 2018.

So, what is it about UK property that holds global interest even at the most challenging of times, and how can international investors use Brexit to support their long-term financial goals?

Why does interest in the UK market hold strong?

Currency fluctuations in the wake of the Brexit vote has had a significant influence on investment decisions. Since June 2016, the value of the pound has steadily fallen; as a result, overseas investors have found themselves enjoying more buying power, particularly within the prime property market.

With a weakened pound, overseas investors have been in the position of being able to snap up UK properties at discounted prices. According the HMRC, for instance, there was a 50% spike in the number of UK homes sold for over £10 million in the year following the vote.

The Bank of England has also cut interest rates to historic lows, encouraging investment in real estate assets. The interest rate has been held at 0.75% since August 2018, with little indication of this being raised in the near future.

Diversifying opportunities

While foreign interest in the market remains, investors’ strategies have been changing in response to Brexit. Namely, the variety of opportunities now on offer means that investors have been looking beyond the traditional remit of property investment in the UK to explore new cities and sub-sectors that offer the potential of long-term capital growth.

Historically, London has been the destination of choice for international investors. However, in recent years, investors have increasingly recognised high-growth cities and leading business destinations like Manchester, Liverpool, Leeds and Newcastle.

This is something we have witnessed first-hand at Experience Invest. Indeed, Manchester and the other so-called Northern Powerhouse cities have attracted some of the highest levels of Foreign Direct Investment of any UK region outside of London according to research from Ernst & Young.

It should come as no surprise then, that house prices in Manchester have surged; in the 12 months to July 2018, house prices rose by nearly 9%. Meanwhile, enquiries by Chinese investors alone about buy-to-let options in the city soared by 255.6% in January 2018 compared to the same month in the previous year.

[ymal]

Cities like this, which are undergoing rapid regeneration, have been clear favourites in the aftermath of the Brexit vote. The reasons for this are clear; with prices in such areas typically below those seen in the capital, rental yields and capital appreciation forecasts tend to be markedly stronger.

Indeed, such cities are also home to a large student population, representing huge demand for year-round accommodation and good long-term investment prospects. This translates to another trend taking hold. Namely, overseas investors are beginning to diversify their assets, looking towards options such as Purpose-Built Student Accommodation (PBSA) that cater to growing demand for term-time accommodation. Indeed, overseas investors dominate the UK PBSA market according to Cushman & Wakefield, making up 55% of 2018 transactions.

The UK’s proven track record for delivering high-quality real estate leaves us in no doubt that international investors will continue to target the UK, albeit perhaps with a different approach. Particularly with a heavy investment in regeneration projects up and down the country, the improvements in infrastructure and connectivity, as well as the delivery of sought-after new-builds, means that the UK property market will remain a top target for investment – even if it does naturally experience an immediate post-Brexit wobble.

Sometimes investing isn’t as straightforward as some make it out to be, and knowing the tricks behind stronger investment strategies can go a long way. This week Finance Monthly benefits from expert advice from Hannah Goldsmith DipPFS, Founder of Goldsmiths Financial Solutions and author of ‘Retire Faster’.

If you’d like your money to work harder, perhaps with a view to retiring sooner, here are five rules you need to follow. And they are probably not what you’re thinking:

1. Trust the markets

The global market is an effective information processing machine. Millions of participants worldwide buy and sell securities in the world markets every day. The real time information they bring to the market helps set the market price. With more than 98 million trades a day, the probability is miniscule that a committee, sitting in a board room and discussing where to invest your money, will spot a favourable discrepancy in a stock price. It is possible, but it is also highly improbable.

Instead, of buying retail funds selected by a fund manager, buy a diversified basket of global index tracker funds and let the markets work for you. A wide basket of stocks from around the world linked directly to market returns can reduce the risk of trying to outguess the markets or worse, paying somebody else to outguess the markets.

2. Diversification is key

Investment returns are random; they cannot be predicted with any certainty. Therefore, don’t limit your investments to a handful of stocks or one stock market. This is a concentrated strategy with high risk implications.

You cannot be certain which parts of the world will outperform others, if bonds will outperform equities, or if large stocks will outperform small stocks. So, don’t let your financial adviser visit you each year moving and changing your funds to justify their existence and their fees. They are wasting your money.

Instead, buy the global market using a diversified basket of index tracker funds and leave the speculation to the gamblers.

3. The Financial Services Industry does not have your best interest at heart

Conventional wealth management institutions are far happier when the status quo prevails; it’s more profitable for them and their shareholders. Why would they provide you with an opportunity to move your money to a competitor at their expense, even if it was in your best financial interest? These corporates are in business to maximise shareholder value – not your investment returns.

It is therefore essential to take back control of your money and ensure that the ‘hidden’ ongoing portfolio costs are kept to the bare minimum. Aim to keep the costs of managing your portfolio at under 1%. The industry average is in the region of 2.3%, so if you save yourself even 1% a year you will have made a substantial amount of money using compounding interest over the life of your portfolio.

For example; if you invested £100,000 with a traditional financial services company paying a total fee of 2.3%, and you received a 7% return on your money for 25 years, you will have a projected future value of £329,332. As £100,000 was yours to start with you will have made a £229,332 profit. The overall cost to you, to make that profit, will have been £109,912.

If you invested £100,000 in a low fee portfolio, paying a total fee of 1.11% and received a 7% return on your money for 25 years you will have a projected future value of £441,601. As £100,000 was yours to start with you will have made a £341,601 profit. The overall cost to you would be £63,718.

This additional £112,269 can be used by you and your family, rather than just giving it away to an industry that feeds the ‘fat cats’. Remember it’s your money … don’t give it away.

4. Think long term, not just about today

When there is a long slow decline in markets, investors want to jump ship and wait for the markets to recover before jumping back in. However, market timing cannot be predicted. Taking your money out in falling markets means you lose real money – thanks to fear. Most people don’t reinvest until they get their optimism back, which is often too late; by then the stocks have risen, you’ve missed out on the gains, and you still have your losses to make up.

Manage your emotions by investing in a risk portfolio that is correlated to your capacity for loss. Not one that is based purely on your search for the highest returns. Remember, investing is for the longer term. History shows that you will be rewarded for your bravery – and your patience.

5. Don’t lose money with the banks

Although the banks’ advertising agencies tell us how wonderful these institutions, I am still reminded of the chaos and misery they caused when they needed bailing out by the tax payer. This was due to what was described by the Financial Crisis Inquiry Commission, as a ‘systematic breakdown in accountability and ethics’.

Your capital deposited in a Bank is being eaten by inflation at 2-3% every year. Over the last 10 years, whilst the stock markets have gone up, the buying power of your bank deposited savings has decreased dramatically and will continue to do so for the immediate future.

My advice is to look at investing, rather than ‘saving’ with a bank; diversify your portfolio; let the markets work for you; and ensure you keep your management fees to around 1%. By following these rules you’ll increase your fund faster and the day you can retire (or splash the money on your dream) will arrive much sooner.

Diversifying any investment assets sounds like a likely success in the long term, but what are the risks when it comes to cryptocurrencies? Levi Meade, Investment Analyst at Columbus Capital, provides some insight for Finance Monthly.

Diversification and its benefits is an area that has been covered many times in prominent financial literature and is something that is both well understood and commonly practiced amongst the traditional investment committee. Therefore I will not seek to reiterate the theoretical advantages of a diversified investment strategy.

However, investing into crypto-assets, as an asset class up till now purely based on speculative value of experimental technology, is a discipline that can prove to be extremely dangerous over the long term without diversification; diversification as a risk reduction strategy is imperative when risk is so high that success of an individual asset is improbable.

Experimental Technology

Crypto-assets are early stage start-ups offering a product completely as open-source software utilising techniques, security models and incentive structures that are largely unproven and at best no more than ten years on the market. This provides two major sources of risk.

Firstly, start-ups mostly fail due to a number of reasons. In general at such an early stage there are an enormous amount of barriers that a founding team need to get past in order to remain in business which are usually disproportionately harder to overcome than problems at later stages of a businesses life cycle. For instance, gaining traction amongst a large enough customer base for survival, in a situation where customers may be reasonably satisfied with existing solutions, can be difficult when human nature tends to be resistant to change. A start-up has to contend with this friction, which is embedded into human behaviour with a significantly superior solution.

Secondly, crypto-assets are pieces of open-source software that harness a variety of concepts from different disciplines which at their intersection requires highly trained experts to build and understand the technology. This creates a much larger probability of there being unknown unknowns regarding the inherent risks of a piece of a technology and on its limitations.

Risk to Reward of a Diversified Crypto Strategy

How does creating a diversified portfolio across the asset class as opposed to a more concentrated portfolio affect the overall risk reward? What is of particular importance is that with such high risk investments come the potential for massively outsized returns. For example, since its inception on the market, Bitcoin has returned over 100,000%. When creating a diversified crypto portfolio, like a venture capitalist, the aim of the game is to increase the likelihood that you are exposed to such outsized gains experienced by the winners. Even in a landscape where the majority of assets experience unfavourable returns over the long term and perhaps go to zero, the outsized gains experienced by a good investment can still lead to above average investment returns.

Also, with regards to the technical risk and the ability for us as investors to assess this technical risk, diversification works as a financial engineering tool to mitigate the affects of unknown unknowns, which may be specific to individual assets. By taking smaller positions in a greater amount of assets you can limit your exposure to such technical risks, which may be difficult to identify or predict.

Why Diversification in Crypto Could Fail

Diversification however does not help to protect against technical risks that affect the entire asset class. Another aspect of investing into experimental technology are the potential risks regarding the foundation of the new technology which could directly affect the entire asset class. One particular risk, which the space is aware of, is the incoming threat of quantum computing. The majority of crypto-assets are secured by some cryptographic problems, which would require an insane amount of computing power to break, which is simply not economically viable given the current technological constraints. However breakthroughs in quantum computing could make it possible to break such cryptographic problems, and in the process rendering Bitcoin and other similar blockchains useless at that point unless they had developed quantum resistance before such an attack occurs. Diversification therefore change the risk profile of the portfolio such that investors are more exposed to broader investment themes or even the some key risks affecting the assets class as a whole in comparison to more asset specific risks.

“Strong global market sentiment for risky assets, a weakened dollar and geopolitical turmoil in the Middle East underline the need for a long-term multi-asset portfolio”, asserts a leading global analyst at one of the world’s largest international advisory organisations.

deVere Group’s International Investment Strategist Tom Elliot, is weighing in after the IMF upgraded its estimate of global GDP growth this year to 3.9%.

Mr Elliot comments: “We have seen an unusually strong start to the year for risk assets, as global investors appear confident that a period of non-inflationary, globally synchronised economic growth is underway.

“Equities and non-core bond markets have benefited from strong inflows in recent weeks, with a slow creep upwards in core government bond yields doing little to deter enthusiasm for risk.

“The MSCI World index of developed market shares is up 7.0% since the start of January, and up 5.5% in local currency terms. The Japanese economy grew at an annual rate of 1.4% in the third quarter 2017, despite a shrinking population. And the MSCI Emerging Market index is up 9.9% since January.

Mr Elliot details three major theories that are on offer for these developments: “Firstly, the ECB and the Bank of Japan look likely to end their quantitative easing programs earlier than had been anticipated, so bringing forward the date when those central banks might also start to raise interest rates.

“Secondly, Trump’s tax cuts announced in December are worth an estimated $1.5tr over the next five years, at a time when the labour market is already tight. This raises fears of wage inflation pushing up CPI inflation.

“And thirdly, a suspicion by many FX traders that the Trump administration wants a weaker dollar as a deliberate tool for narrowing the trade deficit, to be used alongside more overtly protectionist policies. Trump denied this while in Davos on Thursday, calling for a strong dollar… ‘ultimately’.”

Mr Elliot underlines how Sterling’s strength has contributed to a return on the MSCI U.K. index of -0.2%, as dollar-earning FTSE100 heavyweights have come under pressure, and to a return on the MSCI World index in sterling terms of just 2.0%.

He goes on to say that Trump’s ‘Make America Great Again’ policy poses only a modest attack on free trade, and that it should be contextualised.

Mr Elliot states: “Bush raised tariffs on European steel imports early in his first term, and massively expanded agricultural subsidies. The sky did not fall down. We must hope that Trump’s attacks on free trade remain relatively specific and do not become broad in scope.” At the same time, Central bank policy errors remain “a key risk to capital markets”, asserts Elliot.

He says: “Anything that produces a sudden rise in core government bond yields, or cash rates, are a threat to stock markets and high yield bonds.”

“Meanwhile, geopolitical turmoil in the Middle East should be observed closely”, says deVere’s top analyst.

Mr Elliot comments: “The Middle East is developing new themes that one needs to keep an eye on, partly because of the ongoing risk of a regional clash, but also due to the young populations who are less conservative and less inclined to tolerate the status quo.”

He concludes: “As such, I strongly advise a multi-asset portfolio for the long term to offset financial volatility, centred around 60% global equities and 40% global bonds.

“Such funds predicated on this principle are available in spades and differ according to the level of risk for suitable investors, who more often than not, value certain returns over high-risk gambles.”

(Source: deVere Group)

Gerard Gallagher, MENA Advisory Leader, EY

If the GCC countries were to catch up to the average OECD level of diversification, the region could see additional gains of up to $17.7 billion (€15.9 billion), according to EY’s latest report, ‘Growth Drivers 2 report: Digging beneath the surface - Is it time to rethink diversification in the GCC?’ The report, which uses a tracker to look at the levels of diversification across the GCC and how to speed up progress, was launched at the Economist event, ‘Future of Work: Middle East’.

“Dependence on oil and growing youth unemployment are the GCC’s biggest economic challenges. With recent oil price volatility, diversification has returned to the top of the GCC agenda; it’s an opportunity worth $17.7 billion (€15.9 billion). To put that into context, it is more than three-quarters of the entire flow of foreign direct investment to the GCC region for 2013,” said Gerard Gallagher, MENA Advisory Leader, EY.

The EY Diversification Tracker, which benchmarks the GCC countries both globally and against each other, provides a standardised basis for assessing the degree to which economies have moved away from dependence on oil. It focuses on three aspects — export complexity, the share of the non-oil sector and private versus public sector spending — which have been combined to give a percentage of diversification relative to the highest global performer.

The report identifies a ‘sweet spot’ where regional strengths, economic impact and nationals’ employment preferences meet, allowing all three factors to be achieved.