We are not alone in being utterly shocked at the news of Ukraine being invaded by those pesky Russians. The human cost is terrible and cruel, the blow to freedom is quite profound. Markets have inevitably taken a tumble, so how should we react?
On one hand we are bracing ourselves for some turbulence ahead. Prices of every day items were rising anyway – food, fuel and energy. Almost everything that is manufactured is rising in cost, caused in part by the cost of transporting goods and their raw ingredients around.
The world has not recovered from Covid as yet, although here in the UK we seem to be emerging quite well with restrictions being lifted. In the context of world markets, which normally run like clockwork, we are far from seeing supply chains being restored to pre-pandemic levels. This too adds to the problems.
Inflation here in the UK is rising and the inevitable rise in interest rates is slow and tokenistic, for fear of stifling fragile markets. Traditionally rising interest rates will trouble borrowers – whether business or private individuals with mortgages and loans – and yet it is often good news for people with savings and investments. It is a tricky balance for the Bank of England, who, I think, do a pretty darn good job.
The outbreak of war in the Ukraine is fuelling unsettled markets. Once again we see prices fall across stock markets and people often move money into secure places – such as bonds and gilts – these are seen by many as safe havens. Some even buy gold but that’s something I know nothing about.
We, on the other hand, are sitting tight. We have no reason to raid our modest nest egg and besides, that would be going against the plan. Money which is not needed in the short term is invested with the goal of growing and some volatility is accepted. As money is needed in the future, funds can gradually be switched to safer places to mature before cashing in once their more agressive growth has taken place. However, as I’m now officially a “pensioner” having recently activated my occupational pension, we have less need to draw funds down.
The key is often ‘time in the market’ and certainly no knee jerk reactions. Sure, this year’s ISA is worth 6% less than it was when I invested it a few months ago but I am not too worried; it will recover.
Moreover we are continuing with circulating money around, not least to benefit from a little tax relief with on-going pension investments. So this year, following advice, we are investing in a spread of reasonably ethical and sustainable funds (and how you define something as ‘ethical’ or ‘sustainable’ is another subject all on its own).
So this year’s funds are:
- Liontrust Sustainable future UK growth
- Janus Henderson Global Sustainable Equity
- FP WHEB Sustainable Fund
- Impax Environmental Market
- Tridos Equities Fund
With these investments, we are dribbling a little money in each month. This helps our cash flow and evens out any volatility in prices.
However, there has to be more to this than simply our own personal finance. Is our giving strategy right? With Ukraine in mind, do we respond in a different way? Do we follow the herd and give to the church’s appeal? Or perhaps one of the other humanitarian charities? Perhaps a direct response – local appeals for goods, or even being able to sponsor a Ukraine refugee family to come to this country?
Personal choices
Nothing of what I have said should be read as me giving you advice. We all have different circumstances, different stages in life and may have a different outlook on life.
However, surely it must be right to occasionally step back from things and weigh things up – what are the goals, where are we heading? Not to mention the “what if” scenario and protecting ourselves against those things.
So for us, we are sitting tight as far as money is concerned. We are not looking to deviate from our cunning plan which has served us well so far. We do think, with looming price rises and possible shortages, to stock pile a few things, but we’ll come onto that another time.