April 2021

Spring has arrived and, for the first time in what feels like a long while, hope is in the air – and we are all certainly in need of it. Positively for investors, the signs are looking increasingly optimistic, with belief growing that we are making our first steps toward meaningful economic recovery.

The rapid development, approval and rollout of several effective coronavirus vaccines has sparked hope that restrictions can soon start being lifted as per the government’s ‘road map’. Recent research has also shown encouraging signs that, as well as protecting vaccinated individuals, the programme will also slow transmission within communities. This has sparked hope of a powerful surge in economic activity in the near future as restrictions ease.

RECOVERY GOES GLOBAL

Vaccine programmes aren’t just causing a renewed surge of positivity in the UK; the International Monetary Fund’s latest forecasts suggest that the global economy is projected to grow by 5.5% this year. This represents an upward revision of 0.3% from the IMF’s last projection in October 2020. Vaccine-related optimism was also behind a strong inflow of equity funds across the final quarter of 2020.

COULD RATES GO NEGATIVE?

The Bank of England held interest rates steady at 0.1% in February, but it gave banks and building societies a six-month period to prepare for such a possibility. If introduced, sub-zero rates would further reduce the incentive to save on deposit, potentially increasing demand for shares. And, consequently, this would place even greater emphasis on investment portfolios.

SPRING CLEAN YOUR FINANCES

The future of the economy remains uncertain, but there are positive signs for investors. So, it’s more essential than ever to ensure your investment portfolio is working for you. Now could be the perfect time to undertake a review of your portfolio and rebalance the allocation of asset classes as required, ensuring your investments are well-diversified and performing in line with your long-term requirements and objectives.

The value of investments and income from them may go down. You may not get back the original amount invested. Inheritance Tax Planning is not regulated by the Financial Conduct Authority. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.