The Fiscal Cliff- enough to make you hold off investing?

RobStaffs

I have been investing in funds for a few years now. Mainly just my ISA allowance. Overall I have bought low and been pretty lucky.Not massive returns but that down to my risk profile. Recently the markets seem to be on an upward trend but this US issue and also the Euro debt issue still leave me with a feeling there is another market shock on the way .

Recently I have been investing in the Global and Emerging Market funds for the long term.

Any ideas in terms of how you would invest in what might be considered an market waiting for a a big fall at any moment? My allocation in terms of sectors is below

Mixed Investment 20%-60% 46%
Mixed Investment 40%-85% 19%
Global Emerging Markets 15%
Global 4%
Corporate Bond 13%
UK Equity Income 2%

System

It all depends on how your circumstances are and how long you plan to invest for. Generally it is best to adopt a long term view, as no one can predict what is going to happen.

If you try to second guess the market you may well lose out.

Your portfolio is quite defensive already, but the most defensive funds are traditionally absolute return funds which promise growth in a falling market. This is not guaranteed of course!

RobStaffs

teepee83 wrote: »

It all depends on how your circumstances are and how long you plan to invest for. Generally it is best to adopt a long term view, as no one can predict what is going to happen.

If you try to second guess the market you may well lose out.

Your portfolio is quite defensive already, but the most defensive funds are traditionally absolute return funds which promise growth in a falling market. This is not guaranteed of course!

Thanks for this. I was thinking about specialist funds like Healthcare or Technology. More linked to company performance rather than market indicies. Need to do a bit more research I think.

westy22

Recently the markets seem to be on an upward trend but this US issue and also the Euro debt issue still leave me with a feeling there is another market shock on the way .

These are well known issues and are therefore probably fully priced into the markets already. It is in the unknown unknowns where the danger lies!

shocky_2

I don't share your view of the markets. I am not particularly concerned about the fiscal cliff, it is an artificial construct. I am sure the US will kick the fiscal can down the road a bit longer rather than bringing in a balanced budget immediately.

If you are worried about the fiscal cliff and general economic problems, then you would want to invest in defensive sectors of the economy such as retail and healthcare. If the fiscal cliff is the biggie for you then you would want to invest in sectors which would benefit from a falling dollar.