Young investor round-up – your quick digest

Iona Bain

Europe – worth another look?

After the recent Dutch elections failed to produce the populist revolt that many commentators expected, should we be keeping an open mind about Europe as an investment opportunity? Top industry veteran Darius McDermott seems to think so. Writing in City A.M. recently, the managing director of Chelsea Financial Services said the ongoing rallies in UK and US markets could be a distraction from possible bargains on the continent. “European shares are reasonably “cheap”. The overarching reason for this is of course that markets are currently pricing in all the political risk we’ve already talked about. Relative to other major developed markets, however, such as the US and the UK, which have both been trading around record highs, there may be some very attractively priced stock opportunities in Europe, particularly for long-term investors who are happy to ride our volatility.”

Inflation set to jump to “5 – 7 per cent”

Whether you’re an investor or not, the spectre of inflation is bound to loom large in your financial affairs. With the announcement of inflation going up to 2.3 per cent in February, higher than anticipated, fund managers have been warning young consumers to expect more of the same. James Clunie, manager of the Jupiter Absolute Return Fund, said the rate of inflation could go as high as 5 – 7 per cent in our working lifetime. Speaking at the Jupiter Investment Dinner last week, Mr Clunie said: “Everything we have expected or known about inflation has changed. At some point in the years ahead, a great inflation is coming, and it will come because it suits policymakers for it to come, because that will help to wipe out the national debt.”

Two-thirds of Junior Isa investors wasting away in cash

This astonishing figure came courtesy of Nick Kirrage, co-head of the global value team at Schroders, who was speaking at the fund house’s annual investment dinner last Wednesday. He said levels of “distrust” in investment were so high that people were willing to let an 18 year investment sit in cash. “If you’re buying for five years plus, I would be staggered if we saw an end to the rallies we have recently had and since inflation is a pretty good bet to make, you are very likely to make a return. It is astonishing that most people who are investing their money for 18 years would put it into cash.”

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