The question on every investors mind is – what will returns be like in the future?
As the future is unknown all that one can do is try and prepare for it. And maybe learn from the past. Throughout history investors were concerned with the ‘topic’ of the time. No doubt some ‘topics’ had a major influence on short term returns at that time.
However long term returns have almost always been good. And whilst ‘topics /events’ will always happen one needs to remember that the influence from those events will eventually pass. Exactly how much the influence will be and for how long depends on the event.
With that in mind – What is troubling investors? What are those ‘topics’ now? As always, and depending on who you talk to, the list could be long. From our perspective that list could include (and in no particular order) international trade developments, unrest in the Middle East, politics, cyber-attacks, China and climate change etc. Some of these concerns may always be on the list. Combined with what are considered elevated asset prices at the moment (both shares and bonds) we, like many others, would not be surprised if future returns (short term, and at some point) are not as high as recent gains.
One should remember that sometimes the ‘event’ could be very beneficial to returns too.
That said – What can we can we do about it? No one can predict how any of these events will impact markets in the short term however markets tend to grind higher in the long term as the economy progresses. Short-term events and market movements are outside an investors’ control.
It is more important for investors to focus on what is in their control. An appropriate savings plan is an important part of that mix. Any savings should also be diversified (across different shares and bonds, and geographically) and in quality investments (as per in all our funds).