Property

Now you’re going to tell me that houses aren’t safe right?

Data from the Office of National Statistics in the UK showing average house prices in the UK since 1987 compared to global equities: Source: FE

Stock Market Value

Ok well then, the stock market is overvalued surely?

Graph of the price earnings ratio for the S&P 500 for the last 90 years:

The market isn’t currently cheap like in say in December 1979, but neither is it really expensive like in 2000. Over this whole period the index averaged to return investors about 10%pa. Time in the market is more important than attempting to time the market.

Whilst there is a heightened possibility of a recession, history tells us that the market reaction is forward looking and by the time the recession is upon us, the markets may have already begun to increase again.

Source Dimensional Fund Advisors

Conclusion

It is said that the market ‘climbs a wall of worry’. There is always some news story trying to grab investors’ attention or more accurately make them abandon their well-thought-out investment portfolios and jump on whatever passes as the latest fad.

But, the evidence is clear, over the long term, equities are the investment of choice and as the graph below clearly shows, equity investors should be more concerned with the spectre of deflation as we saw in the 1930s rather than inflation.

Disclaimer

This document has been prepared for information and educational purposes only and should not be relied upon by any individual without seeking specific guidance on the suitability of any course of action for their unique circumstances.

Taxation

References to Taxation have been obtained from sources which we believe to be reliable and are based on our understanding of Irish Tax legislation at the time of writing. The level and bases of taxation are based on current legislation (tax year 2022) and may change in the future. We cannot guarantee its accuracy or completeness.

The rates and bases of taxation may change in the future. The Central Bank of Ireland does not regulate tax advice.

We recommend that you obtain specific tax advice for your own personal situation. We will refer you to a suitably qualified tax consultant on request.

Investments

As with any investment strategy, there is potential for profit as well as the possibility of loss. Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors’ interests.

Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken.

Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies.

We do not guarantee any minimum level of investment performance or the success of any portfolio or investment strategy. All investments involve risk and investment recommendations will not always be profitable.

Warning: the value of your investment may do down as well as up. This service may be affected by change in currency exchange rates. Past performance is not a reliable guide to future performance.

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