Some 56% of expats are considering acquiring more stocks by the end of the year a new survey has shown. The poll, carried out by deVere Group, the largest expat IFA in the world, of more than 700 expat clients found that over half are seeking to add more equities to their investment portfolios this year. “The poll’s findings show that retail investors are not behaving as you might expect. A jittery start to the year for stock markets got even worse last month, with most major indexes coping with major bouts of volatility,” said deVere CEO Nigel Green. On Wall Street, the U.S. benchmark S&P 500, for example, ended the first half of the year down nearly 21%, the most dramatic first-half shedding in more than five decades. However, investors are looking beyond this and are getting ready to top-up their portfolios. “This is a good thing as it shows that people are thinking about the long-term. They are preparing to use the downturn to their financial advantage by building their future wealth with quality stocks at lower prices,” explains Mr. Green. “Sensibly, they are not only remaining fully invested but they are looking to build their investments.”
Reasons to be positive
Despite the turbulence, there are reasons for investors be positive about the second half of this year. Many experts opine that inflation could be peaking soon, and expect it to decelerate through the rest of this year. This would be good news for stocks. Also, as explained earlier, as markets continue to be unsteady in the near-term, the panic-selling has created some important long-term opportunities with high upside potential and low risk possibilities for those who buy judiciously. China, which has been a major headwind, is beginning to loosen its strict Covid restrictions that will help ease global supply chain disruption, which is positive for companies and consumers. In addition, financial markets have already priced-in much of the bad news from geopolitical issues, meaning there should be fewer wild swings in the months ahead. Investors will still need to factor-in remain volatility – but as the survey suggests they know that there is still much to be done to grow their wealth.
Despite the bullish sentiment, the deVere CEO also issues a warning to those seeking radically more exposure to equities. “Stepping off the sidelines to enhance your investment portfolios is to be championed, but you must also ensure that those bolsters help to create resilience and dynamism. You must buy wisely in this current volatile, high inflation environment. You should bear in mind that long-term and short-duration assets respond differently to rising inflation and interest rates.” He continued: “In addition, against the current backdrop, you should be considering less familiar, return-enhancing asset classes which could include venture capital, structured products, cryptocurrencies, high dividend stocks, hedge funds and managed futures, and real estate, amongst others.” Nigel Green concludes: “Building your investments is, clearly, the best way to grow your long-term wealth. But don’t get carried away with one asset class. Diversification remains your best tool to reach your financial objectives.”