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The Full Spectrum

By Spectrum IFA
This article is published on: 26th May 2014

Having recently started working for the Spectrum IFA Group I thought it time I start a weekly Newsletter covering issues important to all of us, one way or another. Especially for expats who have made Italy their home/spend much of their time here. The main thrust/focus of my Newsletter is to impart in an easy-to-understand, but not too lengthy outline, important matters and up-to-date information to expats residing in my area on matters such as investments, tax and general financial planning issues. And being part of the Spectrum Group means I also have access to professionals in various fields of expertise.

So, taking the above into account, I thought a very good and apt place to start would be to give a broad overview of current happenings in world markets, as we are all affected one way or another, especially with the speed at which events are communicated.

Probably 95% of people I have assisted or advised has had or still has capital in the markets in one way or another. There are many ways this could occur, viz a Pension Fund, a Money Market Fund, an Insurance Policy, Unit Trusts (Mutual Funds) or direct Share Investment.

Markets go up and down, and likewise interest rates. And then we have inflation to factor in. We may not be affected by these movements in the short-term, but are almost certainly going to be in the longer term (five years onwards).

Hence the extreme importance of reviewing your finances on a regular basis, at the very least once a year, in order to ensure your investment aims and objectives are still on course. We are all told to have a thorough medical check-up once a year so as to ensure all our parts are functioning correctly. And we are willing to pay for this because we can appreciate the need – after all, we want to be on planet earth for as long as possible.

Likewise the common sense of having a proper financial check-up at least once a year. And in most cases this involves no fee but at the end of it one wants to walk away knowing everything is alright but, if not, then to be able to change the doctor’s prescription! And this gives us peace of mind.

Unfortunately many are the cases where we come across people who consult an advisor, but then forget to review or the advisor disappears and they fail to take remedial action to consult another.

There is so much “doom and gloom” about these days, so it is wonderful to read of or hear about news filtering through regarding the economies of the UK and EU which are quite positive, and this augers well for investors who have experienced a bit of a bumpy ride over the last 18 months and which offers potential for new would-be-investors or those who have been waiting. Matthias Thiel, market strategist at Hamburg-based M.M. Warburg, which is bullish on southern European assets. “The recovery story is playing out as expected,” he said.

The European Commission had, inter alia, the following to say in its Economic Forecast for EU countries……

  • United Kingdom: Recovery takes hold, fiscal imbalances still sizeable
  • Italy: A slow recovery is underway
  • France: Recovery remains slow amid sizeable budget deficits
  • Germany: Accelerated growth in the offing
  • Portugal: Gradual economic recovery
  • Greece: First signs of recovery
  • Spain: The recovery becomes firmer while the re-balancing of the economy continues

It is very important to remember that markets experience upturns/good times (good times) as well as downturns (negative periods).

And economic experts never all agree! So when times are prosperous, out of, say, 100 experts, a third will have a certain view or opinion, a third exactly the opposite, and the remaining third will be neutral. And all will have convincing arguments to prove their respective outlook. But true, experienced economists, when asked what they think about a certain economic outlook will be honest enough to simply say “I do not know!”

Economies throughout the globe are all intrinsically linked together, and what happens in one country can impact on another, even if they are miles apart. Like that old adage “If America sneezes we in UK or Italy catch cold.

So, in conclusion, there is much to be positive about but with it comes a caveat: Do not put all of your eggs in one basket but spread your resources across the various asset classes.

In my next Newsletter we will focus on the different asset classes and what it means to diversify.

Until next time, ciao!!

Article by Spectrum IFA

The Spectrum IFA Group is committed to providing a professional financial advice to the expat community in Europe. The Spectrum IFA Group operates in a number of jurisdictions with 12 offices in France, Spain, Italy, Switzerland, Luxembourg, Malta and Portugal with over 50 advisers.

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