Business predictions for 2015

There were three totemic events in business last year and not one was predicted by the so called experts – the collapse of the oil price, the meltdown of the rouble and the devastation at Tesco. So all those predictions, including mine and those others you  read, take with a large pinch of salt. It’s even harder to second guess the UK markets with an election in May. If, for example, Labour has the most seats but cannot form a government as is likely then the Sottish  Nats and Alex Salmond who was so critical of Westminster could ends  up as the power broker – God help us. If so, or Labour get in bed with the Liberals, then the mansion tax, capital gains tax on foreign buyers and stamp duty could crater the property market at the high end.

As for the stock market, shares offer a far more attractive dividend than bank interest so I can see FTSE going  upwards beyond 7000 but as happens in the last months of 2014 prepare thyself for sudden falls. Above all, have the cash to withstand a 30% loss as history shows it will bounce back eventually.

Gold is what is called a correlative or contrarian investment. In other words, if everything goes tits up it’s likely to increase in value so its worth holding 10% in gold. There are several bullion buying options but I like  the gold sovereigns of the Royal Mint as they do not attract VAT nor Capital Gains Tax, as they are regarded as currency and they will store it for a relatively small charge.

It’s also worth  having 10% in investments that bring you pleasure. One friend of mine collects sporting memorabilia and has done well, another collects modern British art and another literary letters and first editions. If you have an eye and know the market these can grow in value but of course offer no income.

Some passive investors prefer to have a portfolio constructed by experts but they charge handsomely for this, 1% plus Vat of the total fund invested is the norm and if they put you in managed funds then there will be a further charge here so be prepared to negotiate and, although the they do not tout this, they do offer a cheaper advisory service. However they will only create a portfolio in line with your risk profile and generally do bring something to the party with their expertise. Invest as much as possible through your ISA and you can now pass on your pension pot free of inheritance tax to a nominated beneficiary. There are many free Pension advisory services so do take advice on this very technical area.

I offer no better advice than to be cautious and preserve your capital. A diverse portfolio of cash, equities, funds, residential and commercial rental properties, gold and alternative investments should ensure you are insulated to the worst economic crash whilst creating sufficient growth and income in less troubled times .