Now more than ever, it’s a common-sense approach to planning ahead that will pay dividends in the long term.
A world of change can make the challenge of planning your finances seem overwhelming. But while so-called “black swan” events now seem almost commonplace – from Brexit in the UK to the US election and geo-political tensions over North Korea – the financial milestones in our lives, from supporting children to preparing for retirement, remain as crucial as ever.
The good news is that it’s never too late (or early) to get your money working harder. By following common-sense rules, accepting that you need to confront key financial challenges and being prepared to ask for help, you can take control – and build a portfolio of savings and investments that’s right for you.
The first rule is that you need to take a long-term view, rather than trying to second-guess the short term. Andy Cumming, Head of Advice at Close Brothers Asset Management, explains there is a crucial distinction between investment and speculation. “It is time in the market that counts, not timing the market,” he says. “In my experience, if by luck you ‘time’ the market successfully, there is the issue of when you reinvest. Recoveries can happen immediately or progressively over time, often gains are lost through indecision and lack of conviction. So invest for the long term.”
Try to beat the market and you will almost certainly get caught out, particularly when events are so unpredictable. The second rule is not to put all your eggs in one basket. “Diversification is the free lunch of finance,” says Nancy Curtin, Chief Investment Officer of Close Brothers. By holding a spread of investments in your portfolio, you’ll be more protected from setbacks in any one area. Losses on one investment should be mitigated by gains elsewhere.
This isn’t to suggest market volatility doesn’t matter, or that the big picture should be ignored; these themes will inevitably have an impact, particularly in the short-term.
The key, however, is not to get distracted. By sticking with your long-term strategy, based on your individual goals and your attitude to risk, you’ll hopefully emerge from the rollercoaster unscathed. Getting sound advice will help you enjoy the ride. A good adviser won’t promise you the earth but they can coach you through the turbulence.
Working together, it is possible to secure your financial future.
The value of investments can fall as well as rise and you may get back less than you invested.
Get in touch today to start planning your future or to discuss your long-term financial priorities.
*First seen in The Times, 19 November 2017.