Investing for income or growth may appear simple enough, but as soon as you start looking at all the alternatives available to you, it can become rather daunting. That is why so many of our clients ask us to help then to find the right strategy for them.
This involves us taking time to understand their attitudes and the timescale over which they are likely to require access to their capital. After all, there is little point in investing in property and shares if you might want to get at your cash quickly - both are generally considered medium to long term investments; property because it can take a long time to sell and shares because they can fluctuate so markedly over the short term.
On the other hand holding lots of money in cash is of limited value, because interest rates seldom offer a positive return over inflation and even if they do, over the longer term they tend to give less growth than shares or property.
In fact, investment is a matter of balance and we find that those clients who accept an “asset allocation” strategy tend to do rather well. This strategy looks first at the timescale over which access to assets is likely to be required and then the different risk profiles of the assets concerned. We then consider the way different asset classes move; for example, when equity markets are rising, fixed interest investments tend to become relatively less attractive, which pushes their price down (but the yield they offer, up). Similarly, if equity markets in the UK are falling, those in the US, Europe or Far East may be rising, or vice versa. Few markets move in the same direction at the same rate, all the time.
By spreading your investment across a wide range of assets, you may only partially benefit from the spectacular returns offered by the top performer if you could have spotted it in advance. But, equally, you will only partially suffer from the losses of worst performers. On balance, things tend to average out to the extent that those following a mixed asset allocation strategy are likely to do better, overall, over the longer tern than those investing in just one class.
We will also consider which investments are most likely to minimise your exposure to tax on income and capital gains. This will often involve use of Individual Savings Arrangements (ISAs) which have now been confirmed as a “permanent feature on the financial landscape” (previously the rules facilitating them were renewed every few years buy the government).
Regents Court Financial can help you identify an asset allocation strategy that most nearly suits your aims.
The value of investments in not guaranteed and will fluctuate. You may receive back less than you invest.
We do not make a charge for an initial consultation.