2016 was a roller coaster year for the financial markets. Things went up, but also down, and as a result it was not a stellar year for investment portfolios.
The world was fixated by Brexit and the US presidential elections. The markets held their breath as we moved into uncharted territory. There is bound to be longer term fall out from these two major events, but for us in New Zealand, the sun came up, or the rain came down (depending upon where you live), and the markets lived on.
2016 confirmed that the consistent rises in portfolio value that investors have experienced over the previous five years are now more difficult to achieve. All economies move in relatively predictable cycles and we are definitely into the next phase of the cycle. Investment markets will be more volatile, returns will be lower and risks will increase.
Amongst all the financial market noise and the doom and gloom media talk, a quiet achiever kept ticking along. That was the New Zealand economy. We have had our fair share of negativity with low dairy payouts (these are now definitely on the mend), Kaikoura earthquakes, and a very high dollar. Despite all this, we have become the envy of the world.
The recently published Legatum Prosperity Index ranked New Zealand as the world’s best place to live. There were 26 other countries which were wealthier, but New Zealand was ‘unrivaled in its ability to turn its wealth into prosperity’. The ranking is based on income as well as ‘wellbeing’ measures such as freedom, health, social ties, business opportunities, governance, nature, education and security.
According to the Legatum Institute, New Zealand has had the biggest prosperity surplus in the world every year for the past decade.
Over the Christmas and New Year period, if things start to get a bit tiring, then take two minutes and reminisce with Fred Dagg and his famous song “We don’t know how lucky we are.” It is bound to put everything into perspective, you will see some younger but still very familiar faces and it should bring a smile to even the most stressed of us.
You can watch it at https://www.youtube.com/watch?v=AYvMeT2GC14