“It is unsettling to have another war in the world. Particularly where it has the potential to have wide reaching consequences for global security, personal safety, on companies doing business with or relying on products and services from Russia, global economic growth, and investment markets.”
- At Fiscal we continue to monitor the war and the developments around this as it impacts on our clients and their personal wealth.
- The most likely impacts are higher inflation for a longer period, a slowdown of economic growth – which is recovering off very low levels after the pandemic, and therefore volatile and restrictive investment markets.
- There will be further significant consequences and impacts on companies and countries reliant on goods and services to and from Russia, or Russian companies. These are widespread and significant.
- This could mean clients requiring higher cash flow than expected to cover their expenses with investment values that are volatile, and less than they were at the end of last year. For each client this may require different action and we will explore this with them as and where required.
- From an investment point of view, it is prudent to adopt a cautious and conservative approach and make the necessary changes as and where required to do everything possible to ensure that each investment strategy achieves the rate of return required to enable clients to achieve the lifestyle they have planned for. As the war progresses this will become more and more difficult if inflation continues to rise as it will, due to fuel and other commodity shortages, while investment markets fall or are at best volatile.
- This is a perfect storm for investors. A simple example is clients with exposure – to what before this war, looked like good Russian companies, which have now lost up to 98% of their value. This means investors have lost this money even when the Moscow exchange starts trading again. If you need any access to this money in the near term it will have serious consequences for an investors financial wellbeing.
“Another factor to consider is whether this will cause any fundamental change to business and the world economy going forward. I am of the opinion that it will. if I am correct then it will require a complete overall of how one views and looks at companies and the market.”