Continuing to monitor and manage your investments in challenging
Remembering the purpose of your investment
At times like these it is more important than ever to remain focused on your financial goals. One way to do this is by reminding yourself of the purpose of your investment. In the majority of cases, the purpose remains the same, but as humans we can get disturbed by global events, and short- term media reports of markets and other related data.
Investing always involves some element of risk which is heightened during periods of turbulence and economic uncertainty. However, through our rigorous research and governance, our investment process is designed to look after your wealth, regardless of how uncertain things become.
We invest in this process to give you peace of mind regarding the products and solutions you invest in. That said, all that is worthless if you are not kept informed and reassured. Hence the importance of your adviser helping with this.
Through regular communication between you and your adviser, you benefit from the peace of mind that comes from knowing there’s always someone looking out for you. This ongoing service includes:
- A reminder and check-in on the purpose of your financial plan, what your personal financial goals are, and whether any significant life event or other change to your circumstances means they need to be reviewed.
- Ensuring you are not taking more investment risk than you are comfortable with.
- Investing your money in a way which meets your objectives by ensuring you do not miss out on getting a better level of return for the level of investment risk you are taking.
- Continuing to ensure that all your assets are optimised for tax savings and placed in the right ownership and tax shelter, so that both legally and ethically you do not pay more tax than you should.
- Taking action, but only when appropriate. In the majority of cases the best advice is to do nothing and stick to your plan. If the purpose behind investing has changed, then it may mean your investment solution is altered accordingly.
Protecting your Investments
We take full time responsibility for your investments, so that:
You are not taking too much investment risk as markets and values change
You do not miss out on investment opportunities as they arise
How do we do this?
Our investment process is built upon the foundation of `diversification’. By diversifying between several different investment types (also known as asset classes), markets and companies we spread the risk. Spreading risk is one of the most important principles of investing. By taking this approach, even if a particular asset class or company goes through a bad patch, this minimises the impact to your overall investment.
Diversification across asset classes means using equities, fixed interest (bonds), commercial property, commodities, alternatives and cash. Then further diversity can be achieved across the different regions of the world, such as the United Kingdom, Europe, United States, Asia, Japan, and Emerging and Frontier markets. Finally, further spreading occurs across many different industrial sectors and sizes of company.
As one of the key reasons for diversification is to spread risk, you need to understand how much risk you’re taking and why that’s important.
Each of us is different and we all have a level of risk we are comfortable to take depending on the purpose of our investment. Your adviser is there to explain the level of risk associated with different types of investments and how that risk could translate in good, average or badly performing markets.
It’s worth remembering the general rule that the amount of risk you take is linked to the reward that is possible. In other words, the more risk you take, the greater the potential for higher returns. Your adviser’s job is to help you meet your financial goals by balancing the risk your need to take with the return required.
Managing investment risk on your behalf
- Investment risk has a number of aspects, and ways of measuring each, which include:
- olatility – how much an investment rises and falls in value over time
- alue at risk – how much an investment could fall in extreme market events, and with what probability
- Credit risk – the risk that an individual company or government held within an investment, defaults on repaying a debt or loan for example
- Liquidity risk – the probability of an asset not being able to be sold when required, irrespective of its market value at the time
- Currency risk – the risk of the exchange rate affecting the value of an asset held in any currency other than UK Sterling
It is important to take professional advice before making any decision relating to your personal finances. Information within this page is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.
Tax and Estate planning are not regulated by the Financial Conduct Authority
The value of pensions and investments can fall as well as rise. You may get back less than you invested.
Will writing is not regulated by the Financial Conduct Authority.
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