As well as being a season of hope and renewal, spring is also viewed as the ideal time to declutter and reorganise. The last couple of years have taught us the importance of achieving balance in our lives – this extends to our finances too, making now an opportune time for investors to review and rebalance their portfolios to ensure investments remain aligned to their long-term financial goals.
Concerns surrounding inflation, rising interest rates and immense global political tensions have all combined to create a potentially disconcerting backdrop for investors during the early part of this year, as markets search for a stable footing. The good news is that many investors with long-term retirement goals tend to have time horizons that extend beyond inflationary cycles and any market volatility experienced is a normal investment phenomenon. History shows that investors who are patient and stick to their plans are more likely to achieve their financial objectives. Diversification is one strategy that withstands the test of time.
What now for the global economy?
A ‘disrupted recovery’
The current mix of uncertainties has led the International Monetary Fund* to downgrade its global growth forecast when its latest economic musings were released in January. While the international soothsayer does expect the global recovery to continue in 2022, it is predicting a ‘disrupted recovery’ with growth forecast to moderate from 5.9% in 2021 to 4.4% this year – this estimate was made prior to the Ukraine invasion, so it’s likely growth expectations will moderate further as a result.
Macro matters
Last year’s gains in growth due to rebounding activity now appear to be behind us. Although the pandemic will continue to impact growth rates, the outlook for macroeconomic policy is likely to become increasingly critical. Indeed, the path of the global economy this year looks set to be largely shaped by central bank policies, specifically, their ability to keep inflation expectations anchored while allowing a supportive environment for growth.
Time to review your portfolio
With the investment landscape undoubtedly changing, now seems an opportune time to spring clean your portfolio to ensure your investments continue to work as hard as possible for you. We can arrange a review to make sure your investment strategy is firmly aligned to your current personal circumstances and that your portfolio is well-balanced, diversified, tax-efficient and inflation-proofed where possible.
*1IMF, 2022
