2014....here we come!

The only certainty that can be offered by future predictions is that they will be wrong. At this time of year many pundits and alike prepare thoughts for the future year and I have penned some of my own generic views for the future year. It should also be clear that financial planning should usually be considered to be a medium to longer term view and looking at one year, future or past, may be of limited overall benefit. However, in conjunction with the medium to longer term view mentioned above may add value.

One of the main targets for financial predictions in the UK is the FTSE 100 index and its end value at 31 December 2014. Ending at 6749 at the end of 2013, my view is that it will continue to climb to 7550 points. I appreciate that this is a little over 10% increase, however I still believe that both the US and UK Equity markets have mileage in them (mainly led by the US market) and I think we will see this come through over the course of 2014. Dividend returns I believe will remain strong and this may be of interest to savers who are suffering from low Bank of England base rates and deposit returns.

It is of note that there is a disparity between the two markets, in that the US main indices, the Dow Jones, broke its previous ceiling in 2013. The UK market has yet to do this, but is indicating its emergence to a growth phase. I think that this anticipated growth will not be without its volatility, again mainly led by the US, with tapering of its easing mechanisms and also the political malaise of the debt ceiling. Volatility is a natural companion of all stock markets, and we may also see volatility (possibly positive) in the underlying currencies of Sterling and the Dollar.

Europe may also show some signs of recovery, however, I still believe that the inherent issues surrounding the Euro and the Eurozone will weigh heavily against the constituent countries and its industries.

The UK also has a General Election at the latest in May 2015. From this perspective, there is likely to be an objective to create a 'feel good' factor (as far as this can be achieved or measured), by the current administration, to promote success at the polls in around 16 months’ time. Whether this can be achieved, based on the limited slack in the current UK budget, remains to be seen.

As one final word of warning, anyone who knows me will know that I am ever the optimist, this being indicated in my last book, The Recession is Over, Time to Grow, published in June 2013. I can be wrong, as any other person offering a prediction.

Past Performance is not a guarantee of future performance and indices can fall as well as rise.

If you would like to review your existing investments, ISAs and pensions and, as an example, their investment allocations, then please contact the team at either our Guildford (01483 578800) or Woking (01483 330800) offices to arrange a time to meet. To reference this further, you may find our Investment Risk Scale of interest on our website in your financial planning. A link to this can be found here.

No individual advice has been provided during the course of this Blog.

Keith Churchouse, FPFS 
Director 
ISO22222 Certified Financial Planner 

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899.