By Jonathan Sloan
For some time now, it has seemed as though we are living in an increasingly complicated and changing world.
It would be hard to summarise the last 10 years accurately from any context, but it is really since the turn of the decade that we have seen the most change.
But what does this mean for investors planning for their financial future?
Gone are the days when seismic political change was dominating the news cycle. From the rise of populism across Western Democracies through to Brexit, investors had to contend with the impact of geo-politics on their financial plans and investment strategies.
For many, this was the first time that they had to cope with this in their lifetime, but (and admittedly in retrospect) most could deal with this in the confines of an ultra-low interest and low inflationary environment.
However, the Covid-19 pandemic changed all of this and presented one of the most challenging set of circumstances faced in living memory, for society in general and investors.
The cornerstones of the consumption-based economy came under significant pressure when consumers were contained to apartments, houses, areas and regions and reached for services and products that could be experienced online or at home.
This was most acutely felt in the US economy, which remains the bedrock of global financial health.
In response, and keen to avoid some of the errors of the 2008 financial crisis, governments and central banks moved quickly to offer centralised support through direct intervention and the reduction of interest rates.
This resulted in a financial period which seemed to defy expectations with a see-sawing stock market.
And, as the world normalised once again (perhaps to a new normal, as it was fashionable to call it for a while) the very beginnings of the inflationary pressures started to appear with the impact of accumulated savings and direct and indirect government support making its way into the economy.
But it is this inflation and the response of governments and central banks to try and control it, which has become the dominant economic story in both financial and mainstream press.
The war in Ukraine, as well as the devastating human impact, has resulted in supply chain issues which have potentially further fuelled the inflationary pressures – especially in Europe.
However, in the US, the inflationary pressures are less from supply side disruption and more so from an over-zealous consumer demand.
And against this frankly confusing background, financial markets have been volatile and proved a difficult arena for retail investors to operate in.
In this context, the temptation for investors can be twofold.
Either to try to “ride the wave” and time jump into and out of financial investments, at just the right moment, or to do nothing due to the confusing environment.
Both scenarios risk missing out on market rises. In most cases, the best course of action is to have clear goals and invest accordingly, for the long-term.
Investing throughout history has shown us that it is time in the market, not timing the market, which is likely to deliver outcomes best aligned to long term goals.
To this end, while a review of the last few years may be interesting, in the context of long-term investing, it becomes a little academic.
Jonathan Sloan is head of Scotland and Northern Ireland at Barclays Wealth
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