We recently put out a ‘Wealth Preservation’ report, looking at protecting your money against the backdrop of a heavily-indebted UK economy. We suggested investing in gold, blue-chip dividend stocks, and cheap foreign markets, specifically Japan and Italy.
Depending on when you bought, most have done well. Gold hasn’t – but we’re very happy to stick with it. Its purpose is to act as insurance against financial crises, or inflation taking off. We still see significant risk of one or other or both, so keep 5%–10% of your money in physical gold.
As for income stocks – we suggested a diversified portfolio of 15 or so blue chips with relatively high yields. These have done well on the whole, and ‘dividend compounding’ – reinvesting your dividends to grow your savings – is a sensible strategy for most long-term investors.
Income stocks still compare favourably to other income-producing investments, so we’d stick with the strategy. Where individual yields have fallen sharply, it may be worth looking at alternatives (Stephen Bland comes up with a new option in The Dividend Letter every month).
On overseas stocks: stick with Italy – it’s performed well, but remains cheap. If the European Central Bank prints money, it could keep rising. Japan has slipped, but the economy is improving and we remain bullish.
As for additions – Russia looks very cheap indeed. If fear over Ukraine recedes, it could recover sharply. But clearly it’s not a market to put your entire life savings into – make it a small part of your overall portfolio.
Subscribers can read the report by logging on here, and clicking on ‘What’s Next for Britain?’.