Financial Planning & Investments: Charles Stanley Norwich
The first step is generally saving, e.g. putting cash in a bank or building society savings account. With enough surplus income you might also choose to invest, for example in property, bonds, equities, or directly in your own business. Investing introduces more risk, but with the chance of greater returns.
Exploring economic conditions
In this construction themed issue, I thought it might be interesting to briefly explore what I will call our ‘Financial Foundations’. These are the underlying fundamental economic conditions to which all our actions and efforts are inextricably linked. For all the great individual decisions we might make regarding our career, savings and investments, a significant part of the resulting outcome is determined by economic factors outside of our direct control.
An inspection of our current financial foundations reveals increasing government and central bank interventions which have allowed levels of debt on our planet to vastly exceed all previous records.
Simply put, there is now a lot more money in the world. The amount (supply) of money in much of the developed world has increased sharply since the 1970s, and in the UK has expanded by more than 25% since 2020 as a result of the pandemic.
Money can be created
Money can be created by governments and central banks (via quantitative easing or QE), or by companies and private individuals borrowing from banks. Indeed, the process of centrally created money has the impact of reducing interest rates, which aims to encourage borrowing because of the lower costs.
Now, one of the few things that economists can agree on is that the more of something there is, the less valuable it becomes (think oxygen- vital to humans but largely free). So, from this perspective, and considering the high levels of inflation we are currently experiencing, instead of saying the price of everything is going up, it might be better to say the value of money is going down (because there is now so much more of it).
So yes, do everything you can with the levers in your control to secure your financial future, but are you paying enough attention to the financial foundations upon which they are built?
The value of investments, and any income derived from them, can fall as well as rise. Investors may get back less than originally invested. Charles Stanley & Co. Limited is authorised and regulated by the Financial Conduct Authority.
Mark Hinds is a Senior Investment Manager and Branch Manager at Charles Stanley Norwich.
Contact a member of our Norwich team to discuss any of the themes raised in this article or to find out how Charles Stanley could help you create a more secure financial future.