By: RAOUL RUIZ MARTINEZ
Investment Advisor, Finesco Financial Services, Ltd
UNDOUBTEDLY YOU will have read or watched headline after headline over the past weeks concerning financial markets across the world. The current “credit crisis” that has been harrowing the markets was brought to the surface primarily by the US subprime mortgage market.
The current crisis has arrived through recent years of fantastic economical growth through low inflation and corresponding low interest rates. At one point, the US base interest rates for borrowing almost reached zero per cent and, in the UK, they reached the lower single digits, and Europe had a fantastic honeymoon under a single currency and falling lending rates, which has been a fantastic opportunity for companies and property investors.
Times have been at their best for the banks but now cash is scarce. The lending pot is now empty and the money has re-appeared in companies’ private bank accounts and balance sheets.
You may be thinking how this affects you. Do you need to be concerned since you may not have a US subprime mortgage (not even a mortgage to speak of) or have any credit liabilities?
Financial markets are inextricably linked and the short answer is that if you have a healthy cash reserve of your own, and an existing diverse holding of assets that may include shares, bonds and property, then you are in a strong position to ride out the current storm.
Too much of one asset (except cash) will surely place you in an adverse position today and your vessel may need some skilled navigation during these times. Just like you, large financial institutions are investing their assets under technical and experienced stewardship, with the objective of the provision of income or return for the immediate future.
Some of you may already have a good understanding of the situation but some of you will be baffled by the lack of clarity. If you have any investments to speak of, you should, at some point, have been contacted by your adviser or provider who is responsible for informing and comforting you with words of a clear and soothing nature during these troubled times.
It’s all too easy to look back at the darkest times but simply too difficult to predict what will happen tomorrow in the light of current events, and the general outlook for the rest of 2007 remains uncertain under the consensus of a number of top financial strategists.
Whether you already have invested or were even contemplating doing so, there is never a good or bad,or even the right or wrong, time to invest.
There is just THE time
One thing is for sure, that with the right personalised and experienced financial advice, coupled with an effective tax strategy, you can build yourself a very solid investment portfolio that will have no problem weathering the storms as long as you and your professional adviser keep an eye on the horizon.
To attain this key and fundamental aspect, you need to be able to sit down and speak to your adviser, or perhaps pick up the phone and get straight forward answers to questions without having to contact a call centre in Asia when, after numerous telephone calls, you are still left feeling confused.
After all, to reach the other side of extreme global financial conditions that ultimately affect you here and now, you need to seek experienced and top quality advice that can be serviced locally.
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