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Battle the inflation beast with your ISA

by James Chu
21/03/2017
Battle the inflation beast with your ISA

As we approach the end of tax year, investors should look at utilising the ISA allowance if that has not been used yet (£15,240 for 2015/2016). They can also consider using the higher £20,000 allowance for 2016/2017 early shortly after tax year end. 

They should act early with creative investment solutions that help them to manage a beast that has been rather subdue for a few years.  That beast is called inflation. 

Over the last few years, inflation appears to be a tamed beast in a cage.  It kept roaring and tried to get out, but external events kept it there. 

This is despite that central bankers have kept interest rates low.  To them, it is more important to keep the economy from sinking than worrying about the inflation beast.  The side effect, however, is that financial markets have got addicted to a low rate environment.  Bonds and stocks continue to rally as investors continue their quest for yield.

But the latest UK inflation figure for February 2017, based on the Consumer Price Index, surged to 2.3%. This is above the 2% inflation target for Bank of England.

It shouldn’t come as a surprise. The pound has dropped nearly 17% versus US$ and 13% versus the euro since the EU referendum last June. Imports outside of the UK has become more expensive. You just need to look at your bills.

It may be too early to say whether the authorities have failed to tame the inflation beast inside the cage.  But investors should get prepared. Traditional assets and cash deposits may not be the right answer going forward.

Reyker has just launched a new discretionary model portfolio called Real Asset Strategies (RAS) for Stocks and Shares ISAs.  Our RAS portfolio has been launched to provide a solution for investors looking for real returns that can potentially beat inflation.  We call these returns real as they come from investments linked to real assets, assets which are tangible and provide storage in value. Examples include infrastructure, properties, commodities etc.  Available to advised clients, you and your adviser can look at our dedicated webpage here for further information.

You can also find our latest structured product offering here, which is an alternative to traditional investments in the current environment.  In particular, our Dual Index Income Plan can provide a potential high income to combat the inflation beast if it really comes out from the cage biting us.  This Plan allows you to invest in a Stocks and Shares ISA across the two tax years.

The best way to find out more about all these unique investment offering is by talking to our investment specialists directly.  You can contact us by dropping an email to investments@reyker.com, or give us a call at 0207 397 2597.

Act now and don’t let the inflation beast hurt your investments!

James Chu

James Chu

James is Director of the Markets and Investments Team at Reyker. A CFA member and industry expert, James specialises in Structured Products, derivatives and development of service offerings for Reyker. A face at most industry events, James is sure to provide insight into some of the most controversial topics in the market today.