Text by Blacktower Financial Management Group
2022 proved to be an economically difficult year. Investors found themselves facing a turbulent and unpredictable market in the wake of the COVID pandemic, and in the face of a precarious situation in Ukraine as well as political instability. The looming threat of a recession led to rising levels of inflation that have proved crippling to some.
Now we’ve got the new year and January & February behind us what can we expect from the rest of 2023? And what should we be doing with our investments?
We haven’t escaped the bear market yet
The stock market crash we experienced in 2022 came on the heals of the pandemic-induced ‘bear market’ of 2020. A bear market essentially sees share prices plumet, promoting selling. For those expecting we’ve seen the end of this after last year, don’t get ahead of yourself. Similar scenarios in the past have taken 50 months to recover from cyclical bear markets. We’re not out of the proverbial woods yet, so keep that in mind as the year goes on.
A continued rise in inflation
Inflation was the spectre haunting 2022, plunging a considerable percentage of the population into economic difficulty. While we were seeing indicators that the rate was improving by the end of the year, we’re not expecting it to drop below 3% for the next 12 months, or return to target until 2025.
Renewable energy
2022 saw a big push for eco-friendly and climate-conscious energy alternatives, making it likely that renewable energy will play a prominent role in many investors’ portfolios throughout 2023. Whereas clean energy initiatives have previously been centered almost exclusively in more affluent, wealthy communities, this is beginning to change, with the movement becoming far more widespread and accessible. This is resulting in more investment opportunities becoming available, with interest being bolstered by Biden’s recent Inflation Reduction Act which offers federal investment in renewable energy projects.
The benefits of long-term investments and tax planning
With another trend in investments for 2023 seeing many people considering why they invest, and what will become of their investments once they die, there’s a greater focus on the long-term benefits of investments and tax planning. Having a diverse portfolio that manages the long-term growth in your investments, and plans ahead for tax and inheritance comes with many benefits. More and more people are starting to recognise this, as last year saw the start of an upward trend in inheritance planning due to the uncertainty of the economic landscape.
If you would like a full review of your finances and the options available to you, you can arrange a complimentary, no-obligation consultation with one of our experienced advisers in Lisbon, or the Algarve by contacting us by telephone or by emailing us. This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information in this communication is correct, we are not responsible for any errors or omissions.
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