Something Different

I attended a meeting today to listen to an investment manager giving advice to a family member who has sold a property and does not know what to do with the proceeds. My relation always sees a glass half empty and is notoriously sceptical about the benefits of stocks and shares. The advice given was to me common sense, that my relation should only follow a conservative growth investment programme and that the portfolio should be put together with the idea of counteracting inflation which is likely to continue at around 5% for a year or so. My relation would ideally like to leave his money on deposit in a bank but even with a likely increase in interest rates over time he accepted that despite the increase in risk by investing in stocks and shares inflation over say five years might reduce the value of his money by 25%. The investment manager mentioned an investment in property but unless the investment was in London where special factors apply (a flight to safety by Arabs, Greeks, Italians and others) he thought the value of property had to fall further as a result of the rebalancing of the economy. As to the investments to be made he proposed a diversified portfolio of companies with strong management, little debt and revenues from widely dispersed parts of the world including the BRIC countries. In all he thought a portfolio of the kind he was suggesting would generate revenues of 3% to 4% of the sum invested. He was also of the view that gilts were not a good investment at the moment as they were too expensive and that the portfolio should not include corporate bonds as these were not capital growth investments. We also considered an inheritance tax saving vehicle in a Business Property Relief investment but this was outside my relation's minimum risk approach. What we were told was interesting and made a welcome change from discussing the euro, the EU and politics although we did not escape entirely from the continuing euro story. One of those present thought it would survive with Greece still part of the eurozone whilst the rest of us thought it might survive but without Greece and some of the other PIIGS. My view remains unchanged even after the announcements made this evening following the meeting of the EU leaders.