Following last month’s guide to managing your money in troubled times, the editor has suggested I follow this up with some further comments about the latest developments in the situation and any other points of interest.

The term ‘credit crunch’ is now a house hold phrase due to the Media’s constant use of the term when talking about anything to do with the financial situation. What has been interesting over the past month is seeing the effects of the global slowdown reach our shores, and the shift from denial to acceptance to already working out ways to deal with the situation.

We have seen the regions stockmarkets fall at a staggering rate, which had not really been publicised much, but now we have seen markets falling to four or five year lows, it is making front page news, adding to the level of concern. Real estate and lending companies have been hit especially hard, following the trends seen in the rest of the world, as the realisation hits here that the housing market will not be immune from the slowdown. However, some of the values are now so low that surely these stocks must represent good value?

In the short term this is obviously going to be painful for some people who have over exposed themselves, or who have put down deposits on property with the expectation of being able to borrow the balance are now finding that they need to increase their deposit or even find all of the funds.

We are now in the situation where lending criteria has been tightened significantly or even withdrawn completely, which indicates that either the banks have run out of money, or they expect to see a significant reduction in the values of the property. Indeed certain areas of the UAE have recorded drops in prices of up to 40%, and HSBC have reported decreases in property values over the past few months.

Looking further a field, nearly two months have past since the near collapse of the world financial markets, the world is still turning, and markets are still just about functioning, albeit with significant additional funding being pumped into the economies.

Bad news continues to be released from numerous sources and sectors, from the banks to builders, to automotives, to retailers. Different companies have been affected to varying degrees, and some have their own strategies to get themselves out of the mess, while others have turned to their government for assistance.

The largest of which occurred this week, with the US government announcing an additional $800 billion to be made available. This followed on from the rescue package given to Citigroup over the weekend, which actually had a positive effect on stockmarkets.

Closer to my own area of business, it has also been very frustrating to see certain products from some of the largest financial institutions, which were meant to provide a safe haven in the economic climate being withdrawn and closed, with various excuses being offered for the closure. The net effect of this is to reduce the providers’ credibility with my clients, and also from a personal point of view, makes me less likely to ever recommend the particular providers again.

So what does this mean for you and I? It means that we really need to be doing more of the same. We still all need to plan for our retirement, and make suitable provision for this. At the moment valuations are significantly reduced, and it is very upsetting to see up to the last three years of growth wiped out, but I believe the long term strategy needs to be reconfirmed and revisited, and to try as difficult as it is, to look beyond the current situation and look to five, ten or even fifteen years time when the funds will actually be needed, when I believe the economic climate will be very different.

If you can see, and are able to accept the current volatility in the markets, there are sound investment opportunities to be taken advantage of, and with the right investment term I still believe a well diversified portfolio will provide a reasonable return for the investor.

As with all aspects of your financial affairs, you should regularly review your financial situation to make sure it continues to reflect your wishes and requirements. As always we at Acuma welcome your questions and enquiries directly so please do not hesitate to contact us if you would like to discuss this or any other issue in more detail.