The old ISA year is dead. Long live the new ISA year. The sooner you start using your new entitlement the better, especially as we all get two bites at the cherry this summer.
We had a timely warning this week that opportunities to invest in the stock market may not last long. The FTSE 100 and other indices have been all over the place, presenting fleeting chances to buy at lower levels. It is vital to take opportunities as they arise, because the market is very good at correcting itself.
The FTSE, despite its gyrations, continues to move sideways but will, I firmly believe, eventually break upwards, possibly during the next couple of months. I see no reason to baulk at my earlier contention that the index will surge above 7,000 points this year. The upward movement, when it comes, is likely to be with a whoosh.
Having scorned IMF economic forecasts in the past, particularly when they have underestimated the recovery in the UK and have urged inappropriate policies on us, I’m going to be a bit of a hypocrite and point to the latest outlook, which suits my theme.
According to the IMF, Britain will be the fastest growing major economy in the developed world with growth of 2.9%. It may not work out quite that way, given the hefty revisions that IMF forecasts are subject to – the figure was put at 2.4% as recently as January. I would not be surprised if we are overtaken by the US, where the forecast is put only a fraction behind at 2.8%.
I certainly cannot agree with the way that the IMF is getting worked up about the tapering of quantitative easing in the US. The IMF fears that a hasty end to QE and to low interest rates threaten global stability yet admits that the longer the US persists with artificial economic measures the harder it will be to get back to normal.
The Fed has been sensibly cautious but steady in scaling back its quantitative easing programme. I hope it ignores the IMF and gets on with what it is doing. After all, the IMF’s panic over UK economic policy last year proved wide of the mark.
But this is splitting hairs. The UK economy is set to grow strongly this year and early indications for the first quarter are favourable. That is why I intend to invest the first part of my ISA allowance sooner rather than later, and certainly before the second tranche becomes available in July.
Rodney Hobson is a long-term investor commenting on his own portfolio; his comments are for informational purposes only and should not be construed as investment advice.
