Most people already have an investment portfolio, which by definition is nothing more than a collection of assets purchased with the intention of making a profit, this is commonly referred to as your investment portfolio. However, many people struggle to answer a simple question – is your investment portfolio fit for purpose?
Whilst some give significant thought to individual investments and how each one complements their overall portfolio, many will have been encouraged to invest in certain funds and products promising high returns over the long term. What is often unclear, however, is that great returns do not typically happen without taking significant risk. Investing in such products and funds which may not be suited to your circumstances or take account of individual risk preferences, can result in disappointment due to unexpected losses.
It is a natural human reaction to respond cautiously when an unexpected loss has occurred. This may lead to an investment being cashed in at an inappropriate time and even more damaging, a loss of confidence leading to a reluctance to invest in the future. To this end it is not uncommon for investors to opt to remain heavily in cash to avoid a similar fate.
It may however come as a surprise that cash in itself is not risk free. Whilst the capital value may be secure, it is easy to overlook the true impact that inflation can have over time. This will be explained in more detail later, but the reality is that investing in cash may also lead to long-term financial disappointment.
Successful investing is best defined as ‘Understanding what your financial goals are and establishing an investment portfolio that will give you the best chance of achieving them, for the minimum level of risk that you are willing and able to accept’.
To make important investment decisions with any degree of comfort, a clear understanding of investment principles and the concept of risk and return is essential. We have produced an informative brochure which explains the process we adopt when investing, if you want to know more why not download Investment Advice. Alternatively, contact us and make an appointment for a free initial no obligation meeting with one of our highly qualified consultants, to understand more about our approach to investing.
The value of your investment and any income from it, may rise as well as fall, and you may get back less than the value of your investment