Market Outlook

Well, 2022 was a bit of a stinker. The chart/table below does not pull any punches with the only ‘winners’ the FTSE UK All Share and the UK CPI. Most other major indices had a very difficult year and the benefits of diversification fled for the hills as there was no where to hide because both defensive and growth assets all suffered.

However, let’s look ahead to 2023. Again no predictions, but it is worth touching on a few themes that will continue to unfold over the months ahead.

Fund managers have had the opportunity now to reflect on the new investment climate and are in the process of rebuilding their portfolios. It will remain a challenging environment for the great and good of the investment world, with the spectre of recession in the UK and on the global stage looming large. It is expected that interest rates will increase again this year and whilst it appears inflation is at the top end of its cycle it is not yet under control.

With this said, it is widely accepted that much of the bad news is factored into current valuations and the recession may be shallower than expected, but perhaps more prolonged than originally envisaged.

Some areas to watch.

The bond market is displaying some interesting data. The traditional home for lower risk areas of a portfolio, fixed interest had a shocking 2022 with double digit losses in many cases – this dragged down cautious portfolios. However, we are seeing fund managers looking at the low capital values with attractive relative yields as a buying opportunity. They are treading carefully as interest rates and inflation continue to work against this asset class, but when the yield on a 10 year government was approximately 1% a year ago but is now approximately 3.5%, you can see why there may be some lifeblood coming back into this market.

Likewise ‘tech stocks’ had a miserable 2022, which had a significant impact on the US markets. These stocks suffered badly from the savage rotation from growth assets to value stocks. Their future fortunes hinge on the outlook for interest rates and inflation. With this said, technology companies and technology funds are here to stay. After their precipitous fall there will be some fund managers looking at ‘bargains’ and adding to the portfolios, although they may struggle to make real headway this year, but a rebuild is underway.

China is another interesting story line. The world’s second largest economy continues to divide sentiment. What has stifled growth is government market interference, a strict line on COVID and debt in the property markets that has put it out of favour with many investors. Like tech stocks it is also considered cheap, with a lot of bad news priced in. There may be better times ahead with travel restrictions and COVID policies easing but a turnaround in fortunes remains someway off ; however, when the climate does improve here and we witness and uptick it will have a direct impact on the commodity sector.

On the surface the UK market fared well last year but this was due to the FTSE 100 being shewed towards energy companies, which had a bumper year. The UK economy is better reflected in the FTSE 250, which painted an altogether different picture, down some 17%. Some UK fund managers are talking up smaller and medium sized companies, which are dependent on continued consumer spending. Unemployment remains low and spending continues, which is good, but with the cost of living crisis remaining a stubborn feature and a squeeze on real earnings means recovery in this area may take some time.

So, no predictions as promised. We will continue to manage and monitor your portfolios in the same way that we have always done by maintaining asset allocations that reflect your risk profiles and keeping downward pressure on underlying portfolios fees.

May I and the team at IronBright wish you all the very best for the year ahead whatever your plans are.

This market outlook was brought to you by Steve Brady

Steve is an investment director and financial planner at Pilgrim Financial Planning, heading up our investment arm — IronBright Investment Management.

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Wells Dementia Alliance Walk

Last month, we took part in the Wells Dementia Alliance Walk, raising money for those in the Wells community living with dementia, as well as their carers.

Despite the wet weather over 60 people turned out along with lots of dogs!

Len Sweales the Wells Town Crier gave us a great welcome and the Rt Rev Peter Hancock Diocese of Bath & Wells started the walk. We were lucky to have Mayor John Osman and Tessa Munt join us as well!

The Wells community gather to take part in the Wells Dementia Alliance Walk

A total of £750 has been raised to date.

It’s worth remembering that dementia is not a normal part of the ageing process. But with more of us living longer lives, the diseases of the brain which cause dementia are becoming more widespread.

There are 850,000 people with dementia in the UK, with numbers set to rise to over 1 million by 2025. This is forecast to soar to 2 million by 2051.

Dementia UK - Helping families face dementia
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The guide to later-life planning and care

When you think about your future, how far ahead do you plan? Perhaps you’ve thought about what your life will look like in 10 years, but have you considered your later years?

While retirement planning is common, it’s often the early years of retirement that people focus on. However, your needs and lifestyle wishes can change drastically over a retirement that could last decades. It’s just as important to think about how you’ll spend your later years as those first years when you are still celebrating retirement.

Planning for later-life financial security means being proactive. The decisions you make in early retirement, and even before that, can have a profound impact on your later years. Considering what’s important to you and what you want your later years to look like sooner rather than later can help you build long-lasting financial security.


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Leaving an inheritance vs gifting during your lifetime

Thinking about passing on wealth can be difficult. However, it’s important to consider how you will pass on money and other assets to those who are important to you. This is why inheritance and gifting should form part of your wider financial plan.

These considerations may influence how you use your wealth during your lifetime, what you write in your will, and other decisions you make. Traditionally, people have left their loved ones an inheritance. Yet, for a variety of reasons, more families are passing on wealth during their lifetime. Depending on your goals and circumstances, this can make sense financially, as well as aligning with your wishes.

Does leaving an inheritance or providing gifts now make sense for you?


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3 useful financial lessons to teach your children and grandchildren

Learning how to manage your money effectively is a key life skill. If you want to build your wealth, it’s important to start from a solid foundation of financial sense.

While you will already have these necessary skills, you may have loved ones who don’t. According to the National Student Money Survey, 71% of respondents said they wish that they’d received better financial education when they were younger.

If you want your loved ones to know how to manage money once they’re old enough to fly the nest, there are a few things you can do to help them. Here are three useful financial lessons to teach them.

1. The importance of developing good saving habits

If you want to instil good financial habits, one of the most important lessons that you can teach your younger relatives is the importance of saving money for a rainy day.

While something as simple as a piggy bank can be a great way to introduce young children to the concept, when they get a bit older, you may also want to consider something a bit more sophisticated.

Setting up a junior savings account on behalf of your child can be a great way to encourage good habits and build their financial knowledge. You could also help them to pick an account, which would give you an opportunity to explain aspects of saving such as what the interest rate is. Junior savings accounts tend to attract a better rate than those for adults and they could monitor the rate and let you know if it changes.

Once it’s set up, it can be a good idea to talk to them about how much of their pocket money they’d like to save each month and how much is available to spend.

Once they get a bit older and get their own phone, you may want to introduce them to apps such as RoosterMoney, which can teach them more about managing their money. This allows them to transfer pocket money and set savings goals so they can see the benefits and rewards of saving.

2. How to budget effectively

Another useful skill to teach younger family members is how to budget effectively, as this is one of the cornerstones of sensible financial planning.

This can also be particularly useful if your loved ones may one day go to university. According to the National Student Money Survey, 1 in 10 of the respondents said they had never budgeted before leaving home.

Many of us have experienced how growing children (and especially teenagers) are never full, which is why food can be one of the easiest ways to teach lessons about budgeting.

One example is to make a snack list for your weekly shop and letting your younger relatives pick which items they want within a budget. You can also use this method to encourage healthy eating by making a piece of fruit cheaper and junk food more expensive.

When they get a bit older, you can also get them involved in meal planning and preparation. Not only is knowing how to cook a useful skill for any child to learn, but it can also teach them important lessons about budgeting and substitution.

3. How overdrafts and credit work

As your loved ones get a bit older, you may want to start teaching them more complicated lessons about managing their money. Explaining to them about overdrafts and credit can be useful, as it may prevent them making costly mistakes.

It can be easy, especially for younger people, to view the overdraft as essentially free money. This is particularly true for students, who often benefit from 0% interest on their overdrafts.

Of course, this isn’t the case and that’s why it’s important to teach your loved ones that an overdraft should only be relied upon as a last resort. If they fall too deep into their overdrafts, they may rack up hefty charges.

Another important lesson can be how to use credit effectively. While many young adults don’t feel the need to get a credit card as soon as they are eligible, it can still be helpful for them to know more about how they work.

Credit can be useful, such as when making large purchases, it can also have potential downsides too. Getting too deep into debt is an obvious one but relying on credit can also leave them open to one major problem – the risk of missing payments.

If they do, it could harm their credit score. This would seriously impact their financial wellbeing and could make it more difficult to purchase a home later in life.

Sitting down with your loved ones and explaining to them the risks of relying on credit can help them avoid running into problems later on.

Get in touch.

No matter what stage of life you’re at, there are always financial lessons that you can learn. If you have questions about your or your family’s financial affairs, get in touch. Please email or call us on 0117 214 0870.

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Our top 7 books about freedom that you should read this summer

The pandemic has been a difficult time for many people but, at long last, some of our freedoms have been returned. After many long months, the UK has taken its first step on the long road out of the pandemic restrictions.

One of the best ways to relax in summer is by sitting down in the sun with a cold drink and a good book, whether on the beach or in your back garden. So, to celebrate the loosening of lockdown restrictions, here are our top seven books about freedom.

1. The Great Escape by Paul Brickhill

Starting off with the classic story of one of the most well-known escapes in history, The Great Escape is the exciting tale of how hundreds of captured British soldiers worked together to organise an incredible breakout from Nazi captivity during the war.

Their task was no easy feat, as the infamous prison camp was supposedly escape-proof. But right under the noses of their guards, they dug tunnels, forged passports, and stitched German uniforms to help them make a break for it.

The escape was well-organised and timed to the second but, of course, sometimes not everything goes according to plan…

This book is an incredible account of ingenuity and courage in the face of danger, proving that real life can be just as exciting as fiction.

2. The Backpacking Housewife by Janice Horton

When ordinary housewife Lorraine Anderson comes home one day to find her husband in bed with her best friend, she decides to put on her coat, set off for Gatwick airport, and never look back.

A heart-warming novel, this book follows Lori’s journey of self-exploration as she slowly discovers who she really is under the titles of wife, mother, and business owner. As she encounters new opportunities, the reader gets to watch her blossom to her full, realised self.

A brilliant book that’s hard to put down, The Backpacking Housewife is an excellent read for anyone craving a bit of summer escapism.

3. Brave New World by Aldous Huxley

In New London, everyone is happy. A perfect society has been achieved through mind-altering drugs, hypnotic conditioning, and the destruction of family bonds. Happiness itself has been distilled down into a pill that can make you forget about anything bad that ever happens.

But there is one person who is unhappy, a scientist called Bernard Marx, whose job in hypnotic conditioning gives him some perspective on how flawed their society really is. His journey to find meaning in this world leads him to explore what it really means to be happy.

Huxley’s classic dystopian novel is a thrilling read and sits at number five on the Modern Library’s 100 best English-language novels of the 20th century. Even though it was written in 1932, its vision of the future is both terrifying and believable.

4. Persuasion by Jane Austen

One of the great Victorian novels, Persuasion was Jane Austen’s last novel and is generally thought of as her most mature.

The heroine of this book is the 27-year-old Anne, who, as an unmarried young woman, is effectively a prisoner of her overbearing father and is trapped in the gilded cage of her family mansion. Worse still, she has no true companions and is surrounded by some of the worst people that high society has to offer.

But when Anne reconnects with an ex-fiancé, whom her family pressured her to leave, this gives her the opportunity for a second chance at love and the possibility of escape from her family.

A beautifully written novel, Persuasion is full of humour and is sure to warm the heart of any reader.

5. The Thing Around Your Neck by Chimamanda Ngozi Adichie

Number five on our list is The Thing Around Your Neck by Nigerian author Chimamanda Ngozi Adichie. This collection of short stories explores a variety of topics, from romantic heartbreak to the difficulty of immigrants to adapt to life in their new country.

A compelling book that addresses many difficult topics, such as religious tolerance, sexual freedom, and economic exploitation in modern Africa, it is as engaging as it is thought-provoking.

6. Freedom by Daniel Suarez

In the much-talked-about sequel to the 2006 novel Daemon, Detective Pete Sebeck returns to help lead a small band of enlightened humans fight against the odds in this terrifying techno-thriller.

Leading on from the prequel, the malicious computer program known as the Daemon is firmly in control, silently using a network of spies to tear down society and rebuild it according to its own wishes.

As civil war breaks out in the American Midwest, Sebeck is forced to lead a populist uprising and fight against the powers that be. In a world of conflicted loyalties and rapidly crumbling authority, humanity’s freedom itself is at stake.

An excellent read for any fans of the cyberpunk genre, Freedom is definitely worth a read this summer.

7. The Long Walk by Slavomir Rawicz

Slavomir Rawicz was a young cavalry officer in the Polish army, but when the Soviets occupied eastern Poland in 1939, he was arrested by the communist secret police. After they beat a confession out of him for things that he had never done, he was sent to a work camp in the farthest reaches of Siberia.

Camp life was brutal for the prisoners and so he and several others formulated an escape plan. They trekked over four thousand miles through Siberian forests, Mongolian deserts, and even the Himalayan mountains to reach freedom in British India.

Rawicz’s incredible journey is a breathtaking true story of survival against the odds and resourcefulness in the face of danger.

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10 Ways for a More Sustainable Life

Sustainability has become a key topic for governments, businesses, and communities around the world. 

Climate change and its impacts on the future are some of the most important topics of this century. In 2021, the United Nations Climate Change Conference, known as “COP26”, will
be held in the UK. COP26 aims to encourage countries to take action to keep global temperature rise in this century below 2 degrees Celsius above pre-industrial levels. A rise above this target is predicted to cause irreversible changes to global ecosystems.

While important, sustainability is about far more than climate change. It’s about managing the use of natural resources to support long-term ecological balance. This could include reducing deforestation, recycling precious materials 

used in technology, or switching to renewable energy sources. Sustainable practices can improve the quality of life of people around the world and preserve natural resources for future generations. 

Sustainability challenges can seem huge, but there are things individuals can do to minimise the impact they have on the environment and society.


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The Complete Guide for First-time Buyers

Buying your first home is a huge decision and a milestone you may have been looking forward to for years. But it can be a daunting step to take too. 

Rising property prices mean UK adults are taking their first step onto the property ladder later in life. The average first-time buyer in the UK is 34, according to Money research. Over the decades, the average age has increased as more young people go to university and face obstacles when saving a deposit or taking out a mortgage. However, Brits are far from the oldest average first-time buyer in the world; in Switzerland, the average first-time buyer is 48.

If you’re thinking about buying your first home, there are lots of things to consider and steps you need to take. Whether you’re perplexed by the jargon or aren’t sure how the home- buying process works, this guide will help lead you through buying your first home.


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