Whenever we are in market conditions such as those affected by Brexit, it is sensible to review the balance of our investment portfolios – and to assess our income and capital needs over the next few years.
For example, looking at asset allocations, many balanced portfolios contain holdings in property funds when appropriate. While such funds provide long-term investment spread for those appropriate portfolios, in uncertain times, and the current Brexit situation is one such testing period, they can become subject to downward pressures. If there is then a significant selling of units or shares, property funds may become subject to a temporary moratorium on repurchases by the managers because, firstly, underlying properties may not be readily realisable to fund repurchases and, secondly, protecting the interests of the longer-term property fund investor is an important consideration for managers. So …
… the ‘storey’ is this. Like Noah, plan ahead! As we always recommend, regularly review your portfolio and your income and capital needs – especially when situations such as Brexit place pressure on less-liquid sectors such as property funds. Some key golden rules, the ‘foundations’ for building on your prudent financial planning strategies, are:
* Review your liquidity;
* Ensure that you have sufficient liquidity to meet your short-term and emergency cash requirements;
* Review your capital requirements over the next, say, three years;
* Take advice – and when doing so, specifically check that you will have sufficient liquidity to meet those capital requirements when needed.
Remember, we are here to help so please do not hesitate to contact us regarding your financial planning situation – Reviews are part of our added-value services for our clients.
We have set out above what is only a brief summary of some key points that involve quite complex considerations. Allowances, caps, levels and bases of, and reliefs from, taxation are subject to change and their value to you will depend upon your personal circumstances. Information and data may change after the date of their original promulgation in our Newsletter or this Focus article. Always seek relevant professional advice before taking, or refraining from taking, any action.
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