Saving and Investing
What are you saving for and why?
Most people already have some form of savings, which could be anything from cash in your current account, deposit account, Cash ISA all the way up to a carefully constructed investment portfolio diversified across a series of asset classes and different ‘tax wrappers’.
However, many people struggle to answer a simple question – what are you saving for and why?
Successful investing is relatively simple, but requires patience and understanding.
We have a few straightforward principles we follow, when advising clients on successful saving and investing:
- Always ensure you have an easily accessible cash reserve, for those unexpected events and expenditures.
- Then focus on what you need to save or invest for and what your timescales are – anything less than 3-5 years should be cash based.
- Understand volatility – this is the fact that investment values will (not may!) go down as well as up. You can reduce the risk and probability of the investment having lost value when you need it, the longer you can leave your money. Hence the ‘less than 3 year’ rule above.
- To achieve the best returns for the amount of risk you are prepared to take, it’s all about time and patience. Don’t rush the decision and when you have made that decision stick with it.
- Little and often (saving monthly for example) is a good way to get started and build your knowledge and experience.
- Don’t try to ‘beat the markets’! We are advocates of passive investing, which some see as dull and boring, but it gets the results over time with, arguably, less risk of an investment manager making mistakes.
- Don’t follow the herd, the latest trend or the next big thing – all fraught with danger, in our opinion.
- Spread your risk – have a variety of different investments, or a diversified approach. Again, for us, it’s all about reducing your risk.
- Finally, don’t get spooked when things go down in value, which almost inevitably they will! 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. 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.
Clear understanding of investment principles
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.
Our role is to help you make a start, and/or bring some focus and discipline to your investment decisions.
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.
Equally, just 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 saving and 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