The last few months should have reminded all of us involved in investing and providing investment advice that few things are certain in life. Market turbulence centred around Brexit, Trump’s trade wars, and longer-term issues like climate change and population dynamics all go to show that change is the norm and “stability” is an abnormal state. The day you think you have everything under control is the day you discover you are mistaken!
Developed market equities have had a decade of growth since the Banking Crisis, with blips admittedly, but for many investors a period where values level out or fall represents uncharted waters.
There has been significant research into the nature of investment returns over time and this has developed a consensus that investment returns are determined by the diversity of the investment portfolio and time invested, rather than the ability to pick stocks and the buying and selling of investments. Trying to pick items like a day trader might give you a brief advantage when you get lucky, but in the long run you will underperform a diversified portfolio held for the full length of the investment.
Our objectives as Independent Financial Advisers and investment advisers when constructing your portfolio are set around longer-term strategies, 5 years and more, invested into highly diversified portfolios (having a mix of asset classes; cash, fixed interest, equities and commercial property). We look to fully understand your attitude to investment risk and your ability to withstand potential losses before making any investment advice recommendation to you, whether this be linked to pension advice or your ISAs.
When you are adding to your portfolio through regular monthly contributions, some volatility in the market can be a good thing as pound cost averaging will give you a better outcome than you might normally expect.
Your investments should be designed so that you always have enough cash to meet day to day needs, as a forced sale of investment assets could lead you to making a loss if you are selling at a time when your investments are worth less than when you purchased them. Therefore, communicating regularly with your adviser is important, to let them know when you need to raise some capital for a family wedding, big holiday or large purchase. Where this becomes particularly important is where you are drawing on investments for living expenses; drawing income heavily from a portfolio can lead to cascading reductions in value or “pound cost ravaging”, without suitable planning.
The study of behavioural economics suggests that people often make poor decisions about investments where they prioritise money now against money later or where fear of the unknown gets in the way of a better choice they are not familiar with. Work by Vanguard, the fund house that specialises in indexed investments, suggests that much of the value of our service as financial advisers is to act as a coach to you; seeing things that you may be unaware of and questioning any decisions made in haste.
If you are becoming uneasy about current market movements:-
When was the last time you reviewed your investments?
Do you think your attitude to investment risk has changed significantly?
Do you have any cash expenses or lifestyle changes coming up that your adviser does not know about?
We’d be delighted to discuss the above with you and provide an impartial view on markets and then on provide an independent review of your investments to ensure they are best suited to your views on risk, capacity to withstand any significant falls in your portfolio and long-term goals.
Arrange an Introductory Meeting with one of our Independent Financial Advisers.
Please contact us at firstname.lastname@example.org or call us on 01223 792 196 to arrange an introductory meeting, at no cost to yourself.
About Martin-Redman Partners
We are a team of experienced Financial Advisers who can advise on your personal or business financial arrangements. We have been building trusted relationships with clients for many years by articulating clear and tailored recommendations in areas ranging from investments to retirement planning, to complex estate planning advice.
The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.