The potential implications of Spain’s bank bailout package appear to have dampened initial market optimism, with investors taking fright after mulling it all over following a more bullish rally earlier. Spanish Government borrowing costs have risen sharply as a result and this has sent some shockwaves through the eurozone. As investors pulled out of debt bonds, Spain’s 10 year bond yield rose to 6.5% – compare this to the cost of German debt – the Bund yield at 1.33%.
Investors who are investing in securities for income purposes may well be quite happy at this kind of market activity, but overall the bond capital investment values can suddenly become weak in this trading environment, especially for non professional investors who are reliant on day to day good news, yet have little means to react quickly to bad news.
For most, investing for the medium and long term is pragmatically the most effective way to get the most out of your money taking into account the level of risk and loss you are prepared to stomach. Trying to second guess the market can be potentially very costly as one lost opportunity after another is chased down.
Far better to engage in a full analysis of your capital and income needs over time and to tailor your investment strategies around a comprehensive financial plan, rather than the more reactive alternative of trying to grab the bull by the horns…
If you would like to know more – SewellBrydenGunn can help – we offer a full and comprehensive financial planning and investment advice service to both individuals and business owners, covering a wide range of areas including investments and pension planning and analysis.
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