Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

OUR latest quarterly Investment Outlook is hot off the press and as usual, there’s analysis of the main investing markets as well as fund picks for 2022 compiled by Investment Director, Tom Stevenson.

Just as interesting, however, are the dozens (and dozens and dozens) of questions that investors send us in advance of the Outlook. Unlike the commentary and data that comprise the Outlook itself - as invaluable as those are - your questions let us tap into the thoughts of ordinary investors who are risking their own, real money.

Having gone through them all, here’s the themes that stand out from your questions this time round.

How bad will inflation get?

It’s not lost on investors that inflation running at circa-5% means they need their portfolios to match that level just to stand still in real-terms. Compare that to a year ago when prices were barely rising and practically any investment gain was pure upside.

Most questions focused on how long we believe inflation would persist for, with some asking whether we were headed for a 1970s inflation spiral.

The good news is that we’re probably not. Although we should expect inflation to rise a bit further before dropping back in mid-year - we all hope!

What use are bonds?

Several questioners asked whether bonds were still worth holding, given the likelihood that expected interest rate rises will push their price lower this year. Some questioned whether the old 60/40 equity/bond split still had merit.

That’s fair enough after a year when the stock market has done so well - you’d be forgiven for wishing you had a few more shares and a few less bonds. Remember, however, that bonds will add ballast to your portfolio and are unlikely to suffer the big drawdowns that can hit shares, even if the upside looks limited from here.  You may be glad of some boring bonds if a correction comes.

What’s more, yields are already rising in response to tightening monetary policy and will become increasingly attractive to income-hunters as they do. Price falls are likely to be dampened for this reason.

Time for a correction?

Many questions reflected the fact that we enter the new year with stock markets still near their record high leaving plenty of room for prices to correct downwards.

This may happen, of course. Or it may not. That uncertainty is simply part of investing and should not, in itself, be reason for pessimism. There are certainly challenges for markets to overcome this year but it’s also true that forecasts for earnings remain solid at an aggregate level. That means that, while stock market levels are high, a lot of that is justified by the performance of companies.

Where can I put my spare cash?

A few investors were looking for tips on how to deploy money into the market - in one go or drip-fed in stages? That’s ultimately a personal decision that depends on your tolerance of risk, and you cannot know which will pay-off in advance.

That said, those phasing their investments, perhaps via a regular savings plan, enjoy the knowledge that if prices do fall they can buy assets more cheaply when they make their next instalment. That can be comforting during periods of volatility and makes it less likely that you’ll panic and be blown off course.

When will the tide turn in emerging markets?

The headline from last year was that global stock markets enjoyed a bumper 2021, but that did not extend to many emerging market - and to China, in particular. Many questioners expressed their impatience and wanted to know when emerging market fortunes would change for the better.

The bad news is that monetary policy tightening in the US creates currency headwinds in emerging markets which may mean the pain lasts a while longer. It’s also true, however, that periods like this are often the best time to invest in a market. The trick is to be able to hang in there long enough to give those markets time to recover.

You can hear more of your questions answered in our Investment Outlook webcast and podcast.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. There is a risk that the issuers of bonds may not be able to repay the money they have borrowed or make interest payments. When interest rates rise, bonds may fall in value. Rising interest rates may cause the value of your investment to fall. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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