Daily Mail - 04.03.2020

Page 49

Picture: EPA

By Sylvia Morris

Daily Mail, Wednesday, March 4, 2020^
MoneyMail 49

dividend payouts hit £110.5 billion

last year. That’s £1 for every £20 —

or 5 pc — invested at the begin-

ning of the year. The yield on the

FTSE 100 is currently about 4.7 pc,

so for every £100 invested you

could hope for £4.70 income.

Dividends are not guaranteed,

but they are a tempting reason to

remain invested.

For my part, I will at some stage

be digging into my pension and

Isas to help fund my retirement,

but that is a few years off yet.

Younger investors can afford to

ride out the ups and downs. I have

told my stepsons to carry on with

their regular monthly investing.

They will be buying at a lower

price than a month ago so will get

more for their money — and their

investment horizon is hugely

further away than mine.

B a l a n c e c a n b e c o m e m o r e

i m p o r t a n t t h a n e v e r d u r i n g

turbulent times.

Some investment funds will

outperform because of their

managers’ strategy or the type of

shares held. Some parts of the

globe may fall further, others

recover faster.

But a balanced portfolio should

give you some winners among

the also-rans.

Ryan Hughes, head of active

portfolios at AJ Bell, warns of

‘ f a l s e d i v e r s i f i c a t i o n , w h e n

investors discover that all of their

holdings are broadly exposed to

the same themes. True diversifica-

tion means holding assets that

perform differently, and over the

past week this has meant owning

government bonds’.

Falling share prices can also give

an opportunity to bargain-hunt if

you think the falls are overdone.

The Chinese may buy less whisky

for a few months but this is a

temporary phenomenon rather

than a long-term trend, so why

sell Diageo? Fund manager Nick

Train bought Fevertree shares for

his Finsbury Growth & Income

Trust last month.

I, too, bought the shares last

year after a steep price fall.

Their continued fall means I am

currently sitting on a rather

unhealthy loss.

Disappointing Christmas trading

had already taken a bite, and fears

that coronavirus will mean we go

out less and drink less have put

them right out of favour.

From a personal perspective, I

know one thing: if Mrs H is forced

to self-isolate for two weeks with

only daytime TV and her husband

for company, the consumption in

our household of gin and Fever-

tree will rocket.

F i n a l l y, a f a c t t h a t m a y

surprise many. FE Analytics

figures show the average China

fund increased in value by 2.84 pc

in February following a 4.59 pc fall

in January.

Ben Yearsley, director of Shore

Financial Planning, speculates

that we could see a similar pattern

once the spread of the virus is

under control. ‘A “ V ”- shaped

market fall and bounce is quite

likely,’ he says.

[email protected]

W

HAT a sobering week

it’s been for investors.

As someone who has

been investing for

more than 30 years, I

have drawn on all my experience

to sit on my hands and do

very little.

The Hazell family’s investments have

fallen around 7.5 pc from their peak.

They could fall again, especially if the

coronavirus (dubbed COVID-19) has a

widespread impact in the U.S.

But perhaps, like you, I am too busy

living my life to delve in and out of the

stock market on a daily basis. I won’t

be selling. My strategy is to buy and

hold, taking money only when I need it

— such as for our house extension a

couple of years ago.

Would it be fair to dub last week the

‘Coronavirus Crash’? The FTSE 100 fell

more than 11 pc and the American Dow

Jones had its biggest one-day fall in

points terms, of 1,191. But this week

has seen a bounce back.

While sudden falls can give pause for

thought, a full-scale bear market (with

shares drifting down over a prolonged

period) can be tougher to endure — and

we may yet see this depending on how

long this COVID-19 outbreak lasts.

I’ve invested through a few such

periods and always came out smiling at

the other end. After the tech boom from

January 2000 to January 2003, the

FTSE 100 fell by 51 pc as events such as

the 9/11 terrorism attacks continued

the drag on shares.

But when these events end, shares

can bounce back rapidly. In March 2003,

they rose more than 13 pc in just three

trading days.

When banks’ greed and incompetence

led to a crisis, the FTSE 100 fell from

6,348 to 3,497 in less than a year

from May 2008 — a 45 pc drop.

But the second half of July 2019 saw

them rise by almost 10 pc, and by mid-

September they were up by 25 pc.

Anyone who only began investing over

the past decade or so — and this means

many of those auto-enrolment pensions

— will not have had sustained falls.

The lesson is that selling will turn

your paper losses into real losses —

and you are very likely to miss out on

any sudden upturn.

The only thing that might prompt me

to sell now is if I needed money in the

next couple of months for a big event

such as a wedding or house purchase.

There’s another often- overlooked

aspect to holding shares: the dividend

income paid by many companies.

Investment company Link says UK

By Tony Hazell

... says Money Mail’s veteran investor TONY HAZELL,

who argues history proves staying calm makes sense

Signs of life in the cash Isa market as rates perk up

SaverS have been given a glimmer of

hope with the launch of an easy-access

cash Isa at 1.25 pc and an Isa draw with

£500,000 in prizes to giveaway.

Until now, the so-called Isa season has

met with a deafening silence. Some

providers have cut rates or even with-

drawn their top-paying accounts.

But two new accounts paying decent

rates are out this week.

Coventry BS’s new Online Isa pays

1 .25 pc. and from Friday, Nationwide is

giving you the chance to win up to

£20,000 if you top up your existing Isa

with the building society or open a new

one. You need to put in at least £100

between this Friday and april 30.

The draw will take place on May 21 with

ten prizes of £20,000, ten of £10,000 and

40 of £5,000. It is open to all savers in

england, Scotland and Wales.

Nationwide will offer a new version of

its 1 Year Triple access Online Isa at

1.21 pc from Friday. It limits you to making

three withdrawals a year. The rate drops

to 0.75 pc after 12 months, so you should

look to move your money then.

The new Coventry account, with no

withdrawal restrictions or short-term

bonus, puts it near the top of the best-

buys tables. It’s an attractive return

considering the average rate is just

0.56 pc, and some big banks, including

Halifax and Lloyds, pay just 0.2 pc to new

savers. It is only bettered by Cynergy

Bank at 1.29 pc and Ford Money at 1.27 pc.

virgin Money pays a slightly higher

1.31 pc on its Double Take e-Isa but it is

only suitable for savers willing to limit any

withdrawals to a maximum of two a year.

Money Mail does not include easy-

a c c e s s a c c o u nt s w it h w it h d rawa l

restrictions or short-term bonuses in our

best-buys tables, but we do keep you

informed of what is on offer.

[email protected]

Why I WON’T

buy INTO The

vIrus paNIc

Keeping their

cool? Traders

at New York’s

stock exchange