Graeme Laws dispenses some big picture financial advice..
A company chairman once wrote in his annual report that forecasting was a very difficult business, especially in regard to the future. Financial advice is always like that, but is now more difficult than usual. Anyone who reckons they know what is going to happen to the economy over the next ten months, let alone the next ten years, is clearly untrustworthy.
My own bet is that growth will be very modest, that taxes may rise but won’t fall, and that real interest rates will stay negative for at least the next few years. But it is only a bet. I have banged on about inflation before, so will simply restate that the Government appears to be quite happy that savers are being screwed by artificially low interest rates, and that inflation will, as it always does, work its redistributive magic. Best of all, it erodes debt. Except of course that a big chunk of our national debt is index linked.
Financial planning now needs to follow the best advice I ever had when I was learning to drive. Just assume that everyone else is an idiot: be prepared for the worst. If it happens and you’ve planned for it, you’ll cope. If it doesn’t, you’ll be quids in. And if you’ve got kids who want to go to Uni, move to Wales, because they won’t pay tuition fees.
The really brave will borrow up to the hilt now and invest in real assets, like houses. It might work, but they’ll look sick when interest rates jump and house prices go on falling.
Please do not bet what you really cannot afford to lose.
Read this article at http://www.candidmoney.com/articles/article216.aspx
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