2023 has been a significant year for the globe. Generative AI (artificial intelligence) such as ChatGPt has revolutionised technology. War has gripped the Middle East again. Disney and Warner Brothers have celebrated their 100th birthdays. The markets have also held some important lessons for investors over the last 12 months.

Every so often, it helps to step back and take stock of what has happened – drawing insights which can inform wiser investment decisions moving forward. Below, our Tees Valley financial advisers here at Vesta Wealth offer 3 such lessons for investors, derived from events in 2023.
We hope these investor insights are useful to you. Please contact us for more information or to speak with a financial adviser about your portfolio strategy:

t: 01228 210 137`
e: [email protected]


#1 Keep a wide scenario lens

If the arrival of COVID-19 in 2020 did not teach investors this already, events in 2023 should certainly be a reminder that investors cannot fully predict what will happen – and, how markets will react. The dawn of generative AI is a good example.

Many analysts were surprised by how quickly ChatGPT and similar platforms spread in popularity. These new technologies are already radically transforming long-established business models as companies seek to stay ahead of the curve.

Google and Microsoft are rolling out their search engine “AI co-pilots”, for instance, whilst Adobe now allows designers to use AI-powered “generative fill” to re-touch photographs and images. Grammarly has introduced an AI “writing assistant” for its cloud-based typing app, and British scientists are even using AI algorithms to supercharge bee research!

This example is a strong reminder for investors to keep a long-term view with their investments, avoiding the temptation to try and time the market. The latter approach requires a high degree of confidence that you know exactly what will happen. In reality, this is not possible.

Investors will typically benefit more by building a portfolio which can adapt to a wide range of scenarios – rather than hoping a particular scenario will transpire (only for it to be derailed by unexpected events!).


#2 Keep an eye on geopolitics

The above point needs to be counterbalanced somewhat by the need for investors to be watchful of what is going on in the world – ready to adapt to it. For many years in the 21st century, economics largely drove geopolitics. Now, however, geopolitics is increasingly driving economics – with a fragmented world of competing blocs emerging across the world.

The Russian invasion of Ukraine has led to significant economic isolation of the former. Global brands from McDonalds, Coca-Cola and Ikea have pulled out (or have announced they will do so) and some key Russian banks have been excluded from the SWIFT international banking system. China is hoping to displace the US and its norms with its own growing financial system. Moreover, in 2023, the clash between authoritarianism and Western liberalism seems to be intensifying – with worrying signs that the former may be gaining ground in at least six states.

Investors should be mindful of long-term geopolitical risks when building and rebalancing their portfolios. Working with a financial adviser can help you do this with a clear mind, avoiding opposite dangers such as “home bias” (i.e. only investing in UK assets).


#3 Keep a financial cushion

The last 18 months have put a lot of financial pressure on households across the UK. Inflation rose to its highest levels in decades – eroding real incomes as individuals faced higher prices at the pump and supermarkets. Interest rates have soared to rates not seen since the 2008-9 Financial Crisis, leading to many homeowners struggling to afford their mortgage payments.

Investors are justified in wanting to build wealth, yet it is also important to protect the wealth which you already have. This means guarding against the need to turn to expensive debts – such as credit cards – if you fall upon hard times. Keeping a healthy “emergency fund” containing 3-6 months’ worth of living costs can help to avoid this.

Moreover, having a robust set of protection policies can help your household to maintain financial stability if the worst happens. Life insurance can provide a much-needed lump sum to your loved ones if you die prematurely (possibly letting them pay off the outstanding mortgage). Income protection could offer a replacement income if you are unable to work due to an illness or injury. Critical illness cover serves a similar purpose but provides a lump sum instead of an income if you are diagnosed with a specific medical condition.

Those looking to retire may wish to explore financial “cushion” ideas with a financial adviser, to ensure a sustainable (or fairly predictable) income over the years ahead. Your pension pot(s) will likely play a key role in these discussions. Yet other options can also be very important such as annuities, the State Pension or final salary/defined benefit pensions – which can provide indefinite, stable income to help cover your essential costs in retirement.



If you would like to discuss your financial plan and retirement strategy, then we would love to hear from you. Get in touch with your Financial Planner here at Vesta Wealth in Cumbria, Teesside and across the North of England.

Reach us via:

t: 01228 210 137

e: [email protected]

This content is for information purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult your Financial Planner here at Vesta Wealth in Cumbria, Teesside and across the North of England.

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