Recession proof investments
Discussion
Sambucket said:
Yeah, sounds simple. But, buy and hold in what asset class, in what denominated currency?
Personal view, haven't a clue that's what I trust the fund managers for.Most of my investments are global with "safer" money in things like Trojan, Ruffer, Capital Gearing.
Rightly or wrongly I'm cautious about being too much at the mercy of anything heavily algorithm driven like ETFs and indexing.
I know it's probably dumb and to some degree cannot be escaped.
DonkeyApple makes a very valid point that I will try and expand on.
It is not about recession proofing your investments, it is about recession proofing your lifestyle.
Too many people do not have a sufficient emergency fund to see them through a job loss or business downturn. Equally debt it still a large issue for many.
The focus should be here as this is where there could be an immediate impact, not on long term investments that you will be using to provide an income in retirement.
Obviously if you have shorter term investments for other purposes (school fees, pay off a mortgage, etc.) then you may want to move these to less volatile assets. Equally you may want to position long term cash holding in defensive investments to try and outgrow inflation.
It is not about recession proofing your investments, it is about recession proofing your lifestyle.
Too many people do not have a sufficient emergency fund to see them through a job loss or business downturn. Equally debt it still a large issue for many.
The focus should be here as this is where there could be an immediate impact, not on long term investments that you will be using to provide an income in retirement.
Obviously if you have shorter term investments for other purposes (school fees, pay off a mortgage, etc.) then you may want to move these to less volatile assets. Equally you may want to position long term cash holding in defensive investments to try and outgrow inflation.
Sambucket said:
Yeah, sounds simple. But, buy and hold in what asset class, in what denominated currency?
One of the luxuries of being British and living in Britain is that the FX side is much less of an issue than it would be for others. We obviously operate in GBP and we have an enormous range of domiciled assets and investments all quoted in GBP. And the icing on the cake is that very many of our domestic investment opportunities carry exposure to other currencies. Our economy is also wide enough that with a concerted effort a consumer can actually decouple a lot of their monthly exposure to FX if they really wanted to. In reality, probably the one direct fx cost that we have and that has a potentially significant impact on consumer spending power is fact that oil is priced in USD but even our oil consumption has considerable elasticity.
On the whole, I think investing in FX exposure falls into the more complex or HNW endnof the investment arena and that for the average retail investor just remaining local is the most practical source of action.
DonkeyApple said:
The first and most important question any retail investor should always ask themselves when an investment is put in front of them is this: ‘ Why is little, old, humble, unimportant me being offered this opportunity, how come no bank, fund, institutional or HNW individual has taken this or kept this for themselves?’
The answer beyond a sensible level of return that is defined by either the global stock market or global lending is that you are being offered an abnormally high level of return because you are considered to be a f
king idiot who’ll buy penny chews for a £1.
Cheers DA, I've just spluttered my coffee all down my shirt reading that! The answer beyond a sensible level of return that is defined by either the global stock market or global lending is that you are being offered an abnormally high level of return because you are considered to be a f
king idiot who’ll buy penny chews for a £1.
Sambucket said:
Checked my account today and shocked to see recent gilt and bond funds up in the 10 - 15% Y0Y range. I thought these were to keep up with inflation, not a leveraged hedge on equity. Don't really understand how they work but seems they are working.
(Govt) bonds are linked with inflation in as much bond prices rise (yields fall) in low inflation environments (expectations) and fall (yields rise) in high inflation environments.There is a view that both the equity and bond markets are expecting the Fed to cut rates, but both markets have entirely different expectations: equity believes this will kick-start growth / inflation, bond otherwise.
JaredVannett said:
DonkeyApple said:
The first and most important question any retail investor should always ask themselves when an investment is put in front of them is this: ‘ Why is little, old, humble, unimportant me being offered this opportunity, how come no bank, fund, institutional or HNW individual has taken this or kept this for themselves?’
The answer beyond a sensible level of return that is defined by either the global stock market or global lending is that you are being offered an abnormally high level of return because you are considered to be a fking idiot who’ll buy penny chews for a £1.
Cheers DA, I've just spluttered my coffee all down my shirt reading that! The answer beyond a sensible level of return that is defined by either the global stock market or global lending is that you are being offered an abnormally high level of return because you are considered to be a f
king idiot who’ll buy penny chews for a £1.I don't think the likes of ratesetter fall quite into the "penny chew" category but when you realise that all of your money is at risk it does make you think.
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