If you have long-term goals you’d like to achieve, investing your money could give you a better chance of reaching them. But perhaps something’s been holding you back from getting started.
Maybe it’s the endless headlines covering the doom and gloom across the globe. Maybe you’re not sure how to go about investing in a way that works for you. Or maybe you just need that little bit of a nudge to get going.
Well, I’m here to hopefully help you feel confident enough to take the plunge. In my role as Skipton’s Technical Research Specialist, I closely follow what’s happening in stock markets, help to research and build investment plans and support people in reaching their long-term goals (you can find out more about this on the Financial Planning page.)
Today, I’m looking at why now could be as good a time as any to invest – especially with a little expert help. Just to be clear, investing does involve taking risk with your money, and you’ll need to be willing to commit a part of your savings for at least five years.
Stock markets have a spring in their step
Since the start of the year some of the major stock markets across the globe have delivered decent returns. In fact, the number of international stock markets near or at record highs have risen this year.
You don’t have to take just my word for it either. Many professional investors haven’t been this positive about markets since November 2021 (according to the Bank of America).
Here’s three reasons why stock markets are performing so well.
- A healthier global economy than expected
Rewind to about a year ago, investors and economists alike were preparing for a recession. Fast forward back to now, and it feels like these concerns have very much faded.
Take here in the UK as an example: at the end of 2023 we entered a short and shallow recession – so short there’s a good chance you don’t even remember it. But in the first three months of 2024, the UK economy grew by 0.6%. That’s the fastest rate of growth the UK has seen in two years.
Positive economic growth can be an important factor to the performance of stock markets. When economies are growing, it boosts expectations for how much profit businesses could make.
- Inflation is trending downwards
Inflation (sometimes referred to as the cost of living) measures the increase in the price of something over time.
In the aftermath of the Covid pandemic, inflation pretty much surged everywhere due to supply and demand issues. In the UK, it peaked at a whopping 11.1% in October 2022 – which was the highest rate for 40 years.
But finally, after what’s felt like a tough struggle, inflation in the US, Europe and UK is heading back down towards target levels. In the US, inflation fell to 3.4% after a few stubborn readings. And here in the UK it stands at 2.3% – the lowest rate since July 2021.
Falling inflation also links in with our third and final factor influencing positive stock market performance.
- Lower interest rates on the way
Central banks like the Bank of England use interest rates to control inflation by cooling demand – hence the many rate rises across 2022 and 2023 which left us with today’s bank rate of 5.25% in the UK.
Falling inflation is allowing central banks to start thinking more seriously about cutting interest rates. Stock markets are expecting the European Central Bank to be the first to do so, closely followed by the Bank of England and the US Federal Reserve later in the year.
When interest rates fall, it can help boost an economy. Consumers and businesses have more money to spend and invest. They may also have greater confidence. This is good for companies because they may see their profits rise, and good for investors because it’s often reflected in share prices.
Investing isn’t just about what’s happening right now
Of course, it’s great news that stock markets have had a good start to 2024. But here at Skipton, we’re big believers of investing for the long-term – let’s say five years or more. And when it comes to investing for longer periods, it doesn’t necessarily matter what stock markets are doing in the here and now.
I’ll let you into a little secret as to why this is: when we look at how stock markets have performed in the past, as long as you keep a long-term outlook, there’s hardly ever a bad time to invest. Of course, there will be times when markets go up and down – that's the nature of investing. But over the long-term, stock markets have a good track record of delivering positive returns.
For example, across the last five years the MSCI All Country World Index would have delivered just over a 12.0% return on your money.
The truth is, we’d never encourage you to invest solely because markets are having a strong period. We’d only ever advise you to invest because it’s right for you and your long-term goals.
Whether it’s a life changing moment, a retirement that’s edging ever closer, leaving a stronger legacy for your loved ones, or simply wanting to make more of your money. Investing your money could help you to build stronger financial plans.
Handy tool:
Our investment calculator shows how investing your money could help to achieve your all-important financial goals. It provides you with a rough idea of the potential returns you could receive if you invested over a set period of time.
It’s free to find out if our advice is right for you
You might call me biased, but what I think is really great is that it costs absolutely nothing to find out if we could help you or to hear our personalised recommendations.
That’s right: nothing.
When you start your investment journey with Skipton, it begins with a free initial consultation to find out if our advice is right for you.
If we think it could be, next you’ll meet with one of our expert financial advisers. They’ll use this time to get to know you and what you’d like to achieve with your money. After this, your adviser will spend some time carefully building you an investment plan that’s centred around your goals and needs.
Good to know:
Financial advice is hard to find on the high street these days, unless you have over £100,000 to invest. We’re proud to be different. If you have at least £20,000 to invest – or £50,000 already in pensions and savings – we can provide expert advice. Our advice is also available if you can invest at least £500 a month.
Remember, at this point you still won’t have paid a penny. And you won’t pay to hear our recommendations either. You’re only charged if you choose to act on our advice.
When it comes to how much you’ll pay, our advisers are transparent about any charges. They’ll make sure you’re clear on these before committing to anything.
From this point, you’ll have the time you need to decide if you think our advice is worth it. If after hearing our recommendations you don’t want to go ahead with the plan, you can walk away there and then.
So whatever your long-term goals are, planning for them requires proper consideration, skill and knowledge. That’s why it’s so important the next steps you take are in the right direction.