Dear Mrs Brown, I thought now would be a good time to write to you as we have only a few weeks left of the 2002/03 tax year to decide what to do with your and your husband's £7,000 Isa allowances.
As you know, in previous years, I have consistently recommended that we should always be invested in equities on your behalf, as most of the long-term trend charts that I have shown you indicate that equities outperform cash and bonds over the longer term.
I have to tell you that, following the release of the latest updated charts, the position has changed dramatically. In fact, some of our core beliefs in equities being the best place for your investments over any meaningful period have come under challenge.
Before writing this letter to you, I have researched very widely the view from various industry experts and I have read endless reports and attended several presentations with leading fund managers giving their opinions. In nearly every case, the outlook for the UK stockmarket and economy, in particular, has been cautious, with many commentators predicting anaemic growth and very modest returns from the UK stockmarket.
I was, therefore, enormously encouraged to read your husband's views about the future of the UK economy and hear how optimistic he is. In particular, his view of future growth rates is very encouragingly optimistic, given the more downbeat views of some of the other respectable commentators that I have read.
Clearly, my view of the prospects for the UK are somewhat removed from those people working every day to keep the British economy moving along.
Given your husband's views, his optimism for UK shares leads me to a confident recommendation to you that he should invest his full £7,000 in the UK stockmarket.
As for your own money, I think we need to remind ourselves of why we invested in equities in the first place. We took the view that the money you were saving would not be touched for around 15 years and that we would genuinely be able to take the long-term view.
Looked at a different way, the falls over the last few years have given you an opportunity to commit your annual Isa allowance to the stockmarket at prices we have not seen for a very long time.
Unfortunately, it is always difficult to make financial decisions when there is so much doom and gloom in the newspapers and the possibility of an impending war. I would encourage you to look at some of the charts that I have sent you in order to give you confidence that buying at difficult times often brings good long-term results.
I know that your husband is very comfortably positioned as far as his pension arrangements are concerned. Some would say that he and his colleagues are immune to the suffering that Middle Britain is going through regarding the money they have set aside for their pension and their old age.
As you personally do not have such a generous pension, we need to keep saving to build up the retirement fund we first discussed. I know that you have spoken to me on a number of occasions about the double Isa investment into technology funds that we actioned on your execution-only instruction in the spring of 2000.
My recommendation to you, therefore, is to view your technology money as either very long term indeed or to make a decision now to switch to something less high octane.
With your new money, I suggest that we commit some money to the US stockmarket and put the remainder in a good UK equity income fund.
Ian Chimes is managing director of Credit Suisse Asset Management