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It’s beginning to feel an awful lot like spring and just as you may spring clean your home, it’s also important to spring clean your finances! This month, we wanted to talk about investments and how to zero-in on what’s right for you.

The Best Investment: 

Something we’re asked over dinner tables and office desks alike is, “What’s the best investment?” The truth is, we don’t have an immediate answer. If there was one investment that worked well for everyone, we’d all be doing it. Unfortunately, it’s a bit more complicated than that.

Before you run for the hills, we want to make it clear that our inability to answer this question isn’t because we don’t know what we’re doing. On the contrary! We can’t immediately answer this question because it’s impossible to answer without knowing more about the person seeking advice. What may be a good investment for one person could be a ill-advised investment for another. That’s why, before answering this question, we like to get to know a person and find out what makes them tick and what, exactly, they want to achieve with their investment(s).


Best vs Appropriate: 

We don’t use the word “best” to describe investments. Instead, we prefer to use the term “appropriate”. Whilst we can’t fathom what a person’s interpretation of what’s best might be, we can demonstrate a process that clearly explains why we think an investment is appropriate.

When making an investment recommendation, we take the time to understand a person’s current position and exactly what they want to achieve through their investments. We also consider three areas around the subject of investment risk. We ask each of our clients who come to see us about investments the following three questions:

  1. How much risk are you comfortable taking? This may also be called your risk tolerance. It focuses on how you feel about the ups and downs of your investments. All investments come with risk and it’s important to understand how you’re likely to feel at times when investments fall (which they inevitably will) and to what degree you can tolerate this emotionally. Stress, after all, is a killer…
  2. How much risk can you afford to take? The amount of risk you can afford to take depends on what you need your investments to do for you as well as taking into consideration your other resources. For example, if you need your investments to generate income that is essential for maintaining your lifestyle, and you don’t have other resources, it’s likely that a fall in your investment could impact your lifestyle and may mean that you cannot afford to take a great deal of risk.
  3. How much risk do you need to take? If you have a specific investment objective, such as paying for a holiday home or school fees for your children or grandchildren, you’ll probably need a specific amount of money at a specific point. Depending on how much you’re able and willing to invest now, we can establish the amount of risk you need to take to achieve your objectives down the line.

Though this is just an overview of our process, we think it’s important to communicate as these questions are crucial for anyone thinking about investing. When talking about your future, we adamantly believe that you shouldn’t take more risk than you can afford monetarily and emotionally and we also don’t want you to run out of money.

Based on our clients’ answers to these questions, we’re able to get a clear understanding of their current situation as well as what they’re looking to achieve. This allows us to recommend funds that they can invest in which are intended to deliver the returns they need while maintaining a level of emotional ease. Over the years, our clients have told us that our straightforward investment process allows them to feel empowered about the choices they make and more engaged in deciding how to make an appropriate investment that will positively impact their future.

What If It Goes Wrong? 

Investing can be scary and we want to remove as much of the fear as we possibly can by having a clear process that our clients follow and engage with. We’re investing our clients’ money, and we never forget that. We take our responsibilities seriously and regularly reviewing our clients’ portfolios is a key part of making the most of investment opportunities.

After all, the truth is that the investment markets are unpredictable (to say the least) and sometimes an investment doesn’t result in the return we hoped for. In these cases, there unfortunately isn’t anything we can do, but by regularly reviewing investments and communicating with clients about their performance, we feel we can cope with what the markets throw at us.

Happily Ever After? 

We think investing should be a straightforward process. We have confidence in the long-term when it comes to investing and tend to ignore the short-term noise that the media loves but really only serves to frighten investors. As such, we don’t believe in tinkering too much with investments and prefer to leave them to deliver returns over the long-term, which they’ve invariably done in the past. In the long run, investing sensibly is very likely to get you where you want to be, you just need to understand the process that’s going to get you there!

Would you like to hear more about investing and following a process that will help you make better sense of the opportunities out there? Tell us what information you’d like to learn and we’ll see if we can share it in a future post.