Back then, I said that this summer marked the tenth anniversary of the ‘credit crunch’ that couriered the sub-prime banking crisis and the developing global recession.
Recently, the base rate was 5.75% – rather than the current more miserly 0.25% – and the spending party of consumers was still in perfect and full swing. Today, in the wake of the roughest recession for three-quarters of a century, severity is still the watchword for many.
And not that prediction is ever easy, but with Brexit around the corner, a poor government, and a complicating geopolitical backdrop, it’s arduous to think of a time when risk has been higher.
Distractions and irrelevancies
Another way, in such happenings, it’s effortless for savers and investors to focus on the wrong economic signals, and on wrong investing messages.
Take the savings rate – the percentage part of our incomes that we collectively save, rather than spend. In a macroeconomic point of view, with inflation rapidly getting high, and interest rates insufficiency, then consumption rather than saving makes more sense.
However, the awkward truth still stays that revenue that used for today cannot become wealth tomorrow – money built up to capitalise a comfortable old age, or a more acceptable standard of living, greater income, or any other of the good things that come from having built up a nest egg.
Also, the general political – and geopolitical – situation adds significantly to the clouds through which savers and investors must try to look through.
Brexit and the individual market, protectionism, the value of sterling, America versus China, and the traditional’ wafer-thin parliamentary majority: creating almost any kind of funding thesis is a tough call. And in that kind of situation, inertia often rules.
Money-building not consuming
Moreover, doing almost nothing is exactly the wrong response to commend-failing to save and invest.
When you get older, you will want a higher profit than before and a better and acceptable standard of living. You will feel more sound and secured with a decent barrier against adversity. You almost possibly will want to retire early.
And so on, and so on.
In which, saving and investing is the logical and practical options to consider.
Now, we all know that a particular party came to an inevitable end, it is evident that high standards of consumer expenses are giving away a floor for a still-precarious economic recovery.
Invest, rather than theorise
Investing costs matter significantly: drive down costs, and returns will apparently improve. Investing is for a long run, and taking an ownership stake in the business – it’s not about day-trading and conjecture. Invest in companies that created for the long term, with secure finances, modest debt, and sustainable entity models. And for most investors, earnings will play a significant role in overall returns.