Simon Read: Time to take a firm grip of your finances in a changing world


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The Independent Online

At the start of last year, I predicted in this column that the eurozone would not collapse, China's stuttering economy would not implode and Chelsea would not finally win the Champions League.

I was only incorrect about one of them and – as a Chelsea fan – was more than glad that my prediction was proved wrong one night in Munich in May 2012.

But I am sad that concerns about the eurozone continue as we start the new year. For investors, the uncertainty means we are likely to see many more months of confused and fluctuating stock markets in 2013.

In a New Year's Day message, Tony Dolphin, the chief economist at the think-tank IPPR, warned that the outlook for the UK economy was for another year of sluggish growth, with uncertainty over recovery and the eurozone crisis still dominating.

His view was that 2012 was the year when "time stood still". With this year shaping up to be much like the last, Mr Dolphin dubbed 2013 "a potential groundhog year". There was a risk, he said, that "talk of years of austerity at home and continuing crisis in Europe creates a huge amount of uncertainty, which will dampen spirits to such an extent that the economy fails to grow again".

He criticised the Office for Budget Responsibility's "cautiously optimistic predictions", which are based on an "unlikely" reversal in the trend for households to reduce their debt and predicted consumer spending would undershoot its forecasts.

He also had a pop at the Government, accusing it of counting on "something just turning up" to lift the economy, like tragic Mr Micawber does in David Copperfield. From what I understand of the Government's plans, I tend to agree with Mr Dolphin's claim that it "still does not have a path back to growth".

But where does that continuing uncertainty leave anyone trying to make decisions about their investments? Decisions made now that could affect finances for years to come. I'm not one for making investment predictions because I know from experience that markets can do exactly the opposite to what you expect, or hope.

But every investor ultimately has to take a view when deciding where to stick their cash. For much of last year, the trend was towards the perceived safety of bonds. But for months now, many experts have predicted the bursting of the bond bubble.

Meanwhile, those who avoided shares missed out on some fantastic performers during the year. To help you avoid making investment mistakes this year, Rob Griffin rounds up some of the best and worst potential performers of 2013 (see right).

Over the page we look at what's in store for house prices, while Andrew Hagger looks at what may happen in the mortgage and savings market.

I hope you find the features interesting but, frankly, it's time to take more interest in your financial affairs if you want to end the year in a better position. Taking a regular snapshot of your investments, savings and borrowing is essential if you want to ensure they are still on track.

Bear in mind that much may have changed since you chose that emerging markets fund or ultra-high special tracker deposit account.

You need to step back and rethink your hopes and plans, which should have governed your financial decisions in the first place. If there's anything major that's changed in your life – children, career or whatever – you almost certainly need to pick apart your financial plans and rebuild them to be a better fit.

But even if nothing has changed since you last gave yourself a financial makeover, world events may have had an impact on your plans. Political changes sweeping the globe could mean making changes to your plans.

In short, take control of your finances this year: don't let them get out of control.

Twitter: @simonnread

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