It is this time of year when many of those in the mortgage and investment markets start polishing their crystal balls and telling you what is going to happen over the next twelve months #WillTheRealMysticMegPleaseStandUp.
In the mortgage world, you have got the same people who have incorrectly said interest rates are going up for the last five years, making yet another prediction this year. Good luck folks, if you keep guessing, you will get it right one day.
The investment market commentators are the worst for it. Every year I see the same kinds of stories entitled things like ‘Good year for the FTSE ahead with record highs predicted’. Strangely enough these seem to be the people running UK investment funds and who will personally benefit from people investing money into them. It worries me when I see things like this because these types of things can be taken as advice and investors flock to put their money into unsuitable areas based on nothing more than one person’s bias opinion.
There are too many things going on in the world and too many variables to consider when trying to predict what will happen in the future with any degree of certainty. With even the brightest in the industry getting it wrong time and time again, it is safe to say nobody ever really knows what is going to happen.
The most dangerous guessers are the ones who have been getting it right in the past. They can lead us into a false sense of security that they will continue to guess right in the future. If you see a man at a roulette table who has guessed red or black correctly a few times in a row, you shouldn’t put your money where he tells you to next time.
There is nothing wrong with having a little guess with what might happen if you put the right warnings on or say that it depends on X Y and Z. My problem is reading articles which are written with such conviction it is hard not to believe them, and more importantly when those predictions cause others to act upon them.
Saying what will happen in the future can be misleading and can lead people into making bad decisions based on predictions which sometimes have no rationale at all. Whether that is when and how fast interest rates will move, where to invest your money this year or which numbers will come out on the lottery on a Saturday night.
The best way to make solid plans for the future is admitting we don’t know the future will bring. Only then can we ensure that we formulate plans which are flexible enough to cope with the unknowns that lie ahead, and insure ourselves against certain risks which we can mitigate. Whether that be taking out a fix rate on our mortgage, buying insurance products to protect ourselves or diversifying your investment portfolio to hedge your bets.
Kieron Bassett Financial Services has two Independent Financial Advisers who specialise in mortgages and investment advice. Contact us on (01524) 832057, via e-mail, info@kieronbassett.com, or visit www.kieronbassett.com.
Jason Hinde DipPFS
5th January 2015
“