It is important to appreciate how investments differ from savings.
Investments are designed to be held for a longer term – usually at least 5 years. You need to be comfortable with tying up this money for a period of time and should not consider investments unless you have some savings in place. Most investments are not guaranteed to return your money in full, although do offer the prospect of potentially higher returns than deposit accounts. Returns, risk and volatility are the factors that will determine a suitable place for your money.
There are three key stages to Investment Management:
- Creating Wealth: In order for wealth to be managed it first has to be created- whether it is by saving money on deposit or by investing in a recognised investment product.
- Managing Wealth: Once created it is important to manage efficiently and effectively, undertaking regular reviews to ensure the investments held remain appropriate for your needs and/or circumstances, and monitoring performance against expectations and suitable benchmarks.
- Preserving Wealth: It is important at all times to protect the wealth that has been accumulated, whether it is against market conditions (volatility), the effects of taxation or inflation and/or changing legislation.
With so many investment choices now available to investors, narrowing the options can be confusing. It is important to have a structured approach to investment management. We will therefore define and agree your investment objectives, determine an appropriate strategy and construct an investment portfolio to satisfy your particular requirements. In doing so, we will:
- Agree your financial objective(s), whether it is for capital growth, income or a combination of both.
- Agree the timescales for investments to be held.
- Determine the level of return anticipated over the long-term.
- Identify an appropriate balance between risk and return.
- Consider asset allocation, correlation and diversification.
- Ascertain how best to own and control investments.
- Ensure appropriate tax-efficient investment.
- Determine suitable benchmarks for comparisons.
The value of investments may fall as well as rise. You may get back less than you originally invested.