Investors’ Two Biggest Challenges in 2013 Looking Ahead to 2014

Even though the Euro-zone crisis has dwindled and international markets have (generally) risen, the investment community did not have an easy time in 2013. For a majority of private investors, the past year presented two challenges for the international investment community:

  1. many investors lost fortunes mistakenly believing the value of gold could only go up, and
  2. investors with small portfolios have been forced to begin making their own investing decisions, after being dropped by their investment adviser.

Golden Disappointment

The price of “investment-grade” gold began 2013 at $1,682 (£1,026) per troy ounce, but has fallen as far as $1,231 (£750) toward the end of the year (2013). This has demonstrated to the investment community, that the value of gold will be (it would seem) determined by supply and demand. At the moment, supply is relatively fixed, however demand depends largely on political and economic sentiment, which is extremely difficult to measure and/or predict. Albeit somewhat of a gamble, there are analysts that believe investors should maintain a small percentage of this asset, because the metal is expected to do well if inflation skyrockets or there is a shock to the global economy. In my investing experience with choosing investments to hedge, there are many other alternatives that have demonstrated far better performance over the last five years; and continue to give me the confidence they will do well in the future.

The Dawn of Do-it-Yourself Investing

There was a time when independent financial advisers were able to present their services as “free” to their customers, because they received commissions from the companies whose products they recommended. The Global Financial Crisis introduced fears that advisers were pushing clients towards the investments that carried the biggest commissions, rather than those that would be most suited to the client’s investment needs. As a result, many investors have been forced to rely on their own resources, and forced to take the do-it-yourself route. Luckily there is an enormous amount of helpful information online, from brokers, fund groups, and independent sources.

In 2014, it is expected that enlisting the help of a financial adviser will become much more difficult, as many financial advisers often will refuse to enter into an agreement with investors who have less than £50,000 to invest. Although choosing their own investments will present some challenges for the investment community, the process of buying and selling investments that profit from economic growth, and do not rely upon popular political and economic opinion for success; will become much more appealing and easier for investors to invest in.

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