Batten down the hatches

If you are an independent financial adviser, may your clients thrive and your professionalism continue to shine like the brightest of stars in the galaxy.

If you are employed elsewhere in financial services – wealth management, the mortgage market or insurance – may your stars also shine like the Plough (the first stars I seek out whenever I look skywards in the dead of night).

Enough of the love-in – now on to the serious stuff. Although I am no financial soothsayer, just a mere hack, I have a horrible feeling this year could be a toughone: for consumers, investors and businesses; for UK plc, the UK, the western and developing world. Maybe I will be proved wrong – I hope so – but it is not that hard to be negative about 2019.

I have already looked into the cost of catching a slow boat to New Zealand where I will trek the rolling green hills of Matamata on the North Island.

Whichever corner you turn, there are nasties lurking in the shadows – the Brexit factor (the plague of our time), continued trade tensions between the US and China, and a heightening of geopolitical tensions, everywhere from Ukraine to the South China Sea.

With interest rates going up, there are also growing fears of a global recession that could take us all back to the dark days of 2007 and 2008. Please, not again.

Depressing? Are you reaching for the Valium as I have just done? And to think I have not even mentioned the dreaded two words that are Jeremy and Corbyn. A combination that could wreak havoc across swathes of our personal finance arrangements, especially when joined with John and McDonnell.

Slow boat to New Zealand

I have already looked into the cost of catching a slow boat to New Zealand where I will trek the rolling green hills of Matamata on the North Island, whiling away my time impersonating a hobbit on the run – and checking that my old pension fund (yet to be accessed) from long ago has not fallen into the hands of the Pension Protection Fund.

For many households and their finances in 2019, it will primarily be a question of battening down the hatches in the months ahead.

Doing all the things that I try to encourage them to do every week in the personal finance pages of the Mail on Sunday – getting best value for their insurances and various utilities: gas, electricity, telephone and broadband. 

Of course, no item of household expenditure should be ‘locked down’ more than a mortgage. In these uncertain times, it would be remiss of most households not to protect themselves with the security of a fixed rate mortgage. Maybe fixed for two years, but even better if the rate is secured for longer (five years plus). 

To add icing to the mortgage cake, and provided personal finances permit, any savings made from prudent household-bill keeping could then be used to overpay the mortgage.

Given the rather unpredictable and pessimistic outlook, it is quite difficult to argue the case for investing. Even companies that make their living from managing equity portfolios are ultra cautious.

Aegon talks about “continued upheaval”, although it also says this year could be “the comeback year” – talk about hedging your bets.

Searching for positives

Ben Yearsley, a director of financial adviser Shore Financial Planning, says: “There aren’t too many positives to look at in 2019 [on the global front] with growth slowing and populism rising.” But he does go on to say that the UK stock market looks cheap on “many measures”.

Wealth manager Canaccord Genuity refers to “another bumpy year for investors”, while Richard Hunter of Interactive Investor warns that the “relentless surge of pessimism could persist during 2019”.

There is more of the same but you get the picture. More pessimism than optimism. More grimaces than smiles.

As financial planners, your role this year will be to reassure clients that despite all the horrible background noise, their long-term financial interests are in good hands. That more often than not it pays to keep investing – and invested – in the stock market, even when the doom merchants are talking about an encroaching apocalypse.

Maybe everything will turn out all right. Maybe, between now and March 29, some kind of Brexit deal will be cobbled together and passed by the House of Commons, and both the UK stock market and pound will rejoice by soaring in value.

Maybe Theresa May will still be prime minister, not JC supported by JM. 

Maybe President Trump and Xi Jinping will embrace and strike a trade deal. Maybe President Vladimir Putin will stop beating his chest and stop pretending that the world is his to conquer. 

Maybe financial Armageddon will be avoided. Maybe, maybe, maybe. Let’s hope so.

Jeff Prestridge is personal finance editor of the Mail on Sunday