After such a strong performance for investments in 2019, it’s almost inevitable that in 2020, Irish investors will see more modest returns.
Markets were up around 28% from January to November 2019, as markets bounced back from a painful few months at the end of 2018. But while it’s unrealistic to expect a repeat performance in 2020, there are a lot of reasons to be positive and stick to the plan as you invest your money next year.
1. Equity opportunities
The fundamentals suggest equity can grow, driven by continued strong company performance. Fund managers like Blackrock, and banks such as JP Morgan, remain optimistic on the scope for global growth led by value sectors like manufacturing and capital investment by business, rather than the tech stocks that have powered equity markets in recent years.
Fund managers are taking note, and we’re seeing multi-asset funds adjusting their strategies accordingly.
2. Uncertainty is causing volatility – but long-term investors have learnt to cope
2020 may finally produce some answers on the US and China’s long-running trade talks.
But by this stage, markets have got used to the ups and downs of these discussions. In fact, if there was resolution on these talks, it could seriously power further investment growth and stability.
3. Brexit will continue to create more heat than light
Brexit looms large from this side of the Irish Sea. But to the global investor, it is a relatively small question. The UK represents around 2% of the global economy. And even if you’re invested in UK-headquartered companies, they often derive their income from many countries around the world.
Three-and-a-half years of back-and-forth on Brexit has not prevented UK companies – or global investors – from earning very strong investment returns.
4. Interest rates no sign of rising
A new regime was installed at the European Central Bank in late 2019. But the bond-buying continues, and the rates remain unchanged.
Every indication is that it will be near-impossible for the Irish investor to earn a return on cash in 2020.
5. The plan is more important than ever
Many of the uncertainties that were with us in 2019 – such as trade tensions, political uncertainties – will remain in 2020. That didn’t prevent major gains for investors this year however. In fact, much of the daily ups and downs were mere noise to the long-term investor.
The lesson is that sticking to the plan is more important than ever.