A little more than four months ago we referred to the uncertainties we would encounter after Brexit. Now we are once again faced with unexpected news: Donald Trump’s victory in the United States. Let’s analyze the situation from an investor’s point of view.
Context for the investor
The expression “When China sneezes, the world catches a cold” is well known; with the US representing around 17% of the world’s GDP. We will see if his Trump carries out measures related to: foreign trade, taxes or immigration, which could lead the country into a recession, and what the consequences may be.
Therefore, it is important to be prudent and prepared for the different scenarios of uncertainty that we face in the coming years at a global economic level.
Investment tips
PIB Group Iberia e Inversión would like to make a series of recommendations for investing well, which we consider fundamental to avoid future surprises:
Thinking about capital preservation
We believe that each client, depending on his profile, should set a floor in fully guaranteed products and a maximum investment ceiling in equities.
In other words, it is not advisable to have all our savings in fixed income and/or variable income products, especially with the upcoming fixed income scenario, which, depending on the investments, predicts significant losses.
If we are talking about products with a view to a near retirement, it is even more important to preserve the capital as much as possible.
Diversify investments
It is essential “not to put all your eggs in the same basket”. This phrase should be a dogma for any investor. A mutual fund may perform badly, but this will hardly happen with a diversified portfolio of five different funds.
It is possible that we may not earn as much, but in negative scenarios we will certainly obtain a much better result.
Knowing where we invest
It is difficult to know all the assets in which a mutual fund or a pension plan invests, but it would be interesting for our advisor to explain the investment policy of the fund manager, and to know if they are really investing in what we think they are investing in.
Many times we may encounter surprises.
View and compare between Management Entities
If we go to one of the main national banks and ask why a Spanish equity fund has underperformed, they will probably tell us that it is the markets’ fault.
But, comparing management companies: if a similar fund focused on Spanish equities in another management company has earned 43.18% more in 3 years, and 63.78% in 5 years, then it is not a problem of the markets, but of a bad management of one, very good of the other, or it is more likely that both situations occur.
This is why we should seek advice and try to obtain as much information as possible about our investments.
From the Savings and Investment Department at PIB Group Iberia, we want to transmit peace of mind, but always under the recommendation to prepare ourselves for any unforeseen contingency. If you want more information and receive personalized advice, leave us your details.
