Large-scale social unrest will pose a major challenge for investors, according to deVere CEO Nigel Green.
Green says: “There are many headwinds ahead for the rest of this year that could impact investor returns. One of the biggest and most overlooked is the rising risk of large-scale social unrest. The global cost of living crisis is the major contributing factor.”
Green described soaring food and energy prices, triggered by shortages of materials, ongoing lockdowns in China and the war in Ukraine, as key drivers of civil unrest.
Green explains: “Red-hot food and fuel prices are the most painful type of inflation. People cannot stop feeding themselves or their families. Similarly, the costs of transportation make up the price of almost everything we buy.
“When people can’t feed their families, get to work or take their kids to school due to high fuel prices, or heat their homes, it’s an almost inevitable recipe for large scale civil unrest. The downturn in the property market, slower economic growth, more redundancies and less cash available for governments, all adds to a perfect storm scenario.”
Green says investors should review and adjust their portfolios to help mitigate risks and seize opportunities.
He says: “Stepping off the sidelines to enhance your investment portfolios in these times is to be championed but you must also ensure that those bolsters to your investment help to create resilience and dynamism. In short, you must top up your portfolios wisely in this currently volatile environment to side-step risks and capitalise on the upsides.”
According to Green, a balanced investment approach is the most sensible, with investors advised to hold some cash or liquidity funds for emergency uses or opportunistic investing.
Green adds: “Investment headwinds are many in the coming months. But mass social unrest is not talked about enough, likely due to high-level political and commercial interests. Not paying attention could be a costly mistake.”
