The Future Investment Landscape
With cash deposits still not showing signs of increasing what sort of return can I expect through investing over the next few years?
What we do know is that investors with long-time horizons of 10 years or longer can reasonably assume that market returns will run in line with their long-term historic norms: 8%-10% for equities and maybe half that amount for bonds and fixed income, although past performance is no guarantee to future performance.
In recent years investors have enjoyed strong returns from equity markets as the bull run continues to run its course, however the outlook is now one of higher risks and lower returns. We believe that investment decisions will need to be based on even more precise risk analysis and a disciplined decision process.
True, economic fundamentals are fine: The economy is solid, unemployment remains low, and corporate earnings growth has been robust.
But much of that good news is arguably already priced into stocks' valuations today along with headwinds ahead.
It is impossible to predict the future. But like it or not, market-return assumptions are an essential input for your financial plan. Without some reasonable expectation of what your portfolio will return, you can't know how much you'll need to save and for how long.
Our market outlook underscores the need for investors to remain disciplined and globally diversified, armed with realistic return expectations and low-cost strategies.
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About the Author
John Leonard, Head of Business Development
Tel: 01534 488773 • Mobile: 07797 742811
John Leonard is responsible for our Private Clients based in Jersey. John recently joined SaSo Strategic Advisers in August 2017 having spent the previous 7 years in an established financial services business where he was responsible for providing advice to both private and corporate clients in all areas of financial planning.