This piece first appeared in Saga Investor in December 2001
The text here may not be identical to the published text

Don't Panic

These are tough time for investors. Even before the terrorist attacks on America the price of shares around the world was falling. Japan, the second largest economy in the world, was heading for recession. And, after ten and a half years of uninterrupted growth, the economy of the United States of America was slowing down too. Since the attack, the airline and tourist industries have been hit hard and with them a whole infrastructure of business has suffered. Now we are asking not if the US economy will start to shrink rather than grow but when that will happen and for how long. It is the greatest time of uncertainty for a generation.

With military action continuing, terrorist threats ever-present, and millions of people around the world hanging on to life itself by their fingernails, it may seem trivial to ask "how do I protect the financial future of myself and my family?" But it is not. It is a basic human urge, as natural as breathing, to want to protect in times of threat.

There are five basic things to do. Pay off debt – if times get harder, creditors will get tougher. If you are buying your home, re-mortgage – most people can easily save £1000. Keep a bigger proportion of your savings in cash – tax-free if possible – it is the safest place. Spread your investments, not just across companies, but across countries and the type of investment – and feed money in slowly, hedging your bets on whether markets will rise of fall. Keep paying into your pension – it is a good long-term investment.

It is a terrible truth that war can be good for trade. The aftermath, reconstruction and regeneration, can be even better. Stick with it. And prosper.

December 2001


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