With all the hype out there relating to COVID-19, anyone could be forgiven for feeling a little het up at the moment.

And, if everything you read in the news was to be believed, you might think we’re about to enter financial Armageddon, with talk of mass job losses, crippling economic fallout from the cost of all the stimulus the Government has switched on to keep things afloat, and the potential for house prices to fall through the floor.

But hang on a minute!

While we don’t want to in any way belittle the hardship some are experiencing, or the fact that there will be severe economic consequences, some of which have yet to unfold, it isn’t all doom and gloom. Our Director, Wayne, described why, in his opinion, it’s important to take some of what we hear in the news with a pinch of salt. He believes that, while it’s always advisable to be prudent, there are more reasons to take heart at the moment than you might think. 

And, importantly, when it comes to pensions and other investments, there’s no need to reach for the financial life raft just yet.

“All the bad news we hear, everywhere we turn, does make me cross,” said Wayne. “Because, while, of course, there are challenges in the economy and it’s important to have an understanding of those, it isn’t all bad. However, perhaps reflecting the old adage that ‘bad news sells’, we typically don’t hear so much about the green shoots of hope that are springing up in many places, too.”

Wayne believes it’s important, at times like this, to focus on the facts and build our own picture of the way things really are, and any implications that might have for us personally. “Otherwise, he explained, “people can end up being worried unnecessarily – and potentially making the wrong financial decisions as a result.

“If you know how to look behind all the hype – and of course, that’s our job as financial advisors, it’s really not as bad as you might otherwise be led to believe.

“For example, despite all the predictions of a catastrophic fall in UK gross domestic product (GDP – basically, the nation’s income), now that the actual figures are in for the first quarter of 2021, things are looking pretty good. 

“They suggest that the economy shrank by just one-and-a-half per cent in that period, despite the whole country being locked down again on 4 January and these being the first reported quarterly figures after Brexit, which was also predicted, by some, to result in double-digit losses.

“The figures show that, within the quarter, economic output fell sharply, by four per cent, in January, before increasing by 0.7 per cent in February, and then by 2.1 per cent in March. And everything’s looking set for this pick-up to continue into positive growth in Quarter Two, with the economy having taken off in many areas since 1 April.

“Based on this, I wouldn’t be surprised if we record growth of five per cent in that period – with the potential, I think, to even see double-digit economic growth for the full year. This is something we haven’t seen happen for donkey’s years, but I believe that, if the stars align and continued lockdown easing sees the predicted surge in consumer demand boosting beleaguered sectors, it’s entirely possible in 2021.

“House prices, too, have borne up well, with the Nationwide Building Society House Price Index recording 10.9% national growth in March, the highest level in almost seven years – driven by pent up demand after the market largely ground due to a halt in 2020 due to lockdowns, as well as a trend towards people moving either for more space or wanting to live in a different area, for example in the countryside – dubbed ‘the race for space’. The average house price has also hit a new record, at £242,832, up £23,930 during the past 12 months. and Yorkshire & the Humber was top among the top regions for price growth, at 7.7% in the year to the end of March,  albeit from a relatively lower rom a lower starting point.

“Meanwhile, according to the Office for National Statistics, UK goods exports to the EU rose by 8.6 per cent to £12.7billion in March, despite Brexit, and imports from the EU to the UK by 4.5 per cent, while, at the same time, fresh trade deals are being done with the rest of the world – including the first, rubber stamped one announced with Australia this week, so things are nowhere near as bad as people might think.”

Time to hold our nerve

According to Wayne, the economy and financial markets move in cycles and it’s important for investors to hold their nerve when challenges emerge, so that they can enjoy the ups when they, inevitably come.

“I’m really keen to get the positive news and message out there that, despite all the scaremongering about how much worse off we would be as a nation post-Brexit, and then an unanticipated global pandemic, things are by no means as bad as was predicted.

“I believe this passionately because, otherwise, there’s a risk of people panicking and taking action that will be detrimental to them in the long run. This is because, while their instinct might be to withdraw all their investments and keep them under the bed instead, the reality is that, so long as they treat investments as a long-term strategy, they are always better riding it out than cashing in when values are low,” added Wayne.

“I’d always advise anyone who’s worrying about what they’re hearing to take a step back, take all of the stuff in the media with a pinch of salt and seek proper financial advice and reassurance.

“Ultimately, the markets are programmed to make money and will find a way of doing so, and seeking out new opportunities to promote recovery, no matter what happens.”

Our team of advisors, including Wayne, are devoted to monitoring what’s going on in the markets and economy, so that we can anticipate trends, help our investors make the right choices and, where possible, allay any worries or fears you might have. We’ll be sharing insights like this first one, from Wayne, on a regular basis. However, if you think you would benefit from a personal meeting to discuss your personal financial situation, goals and aspirations.

If you’re asking yourself questions like these and would like to arrange a free, no-obligation initial appointment to take a fresh look at your financial health and your options for everything from your pensions to your investments and the insurances you have in place, email us or call (01482) 860700

This blog is intended to provide readers with viewpoints, opinions and inspiration regarding options they might want to consider. It is not intended to be taken as advice and we strongly recommend seeking professional financial advice before taking any action.