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Investment Management -
How To Protect Your Investment Portfolio During Periods of Economic Instability
With the looming recession and persistent high levels of inflation, many are wondering what the best options are for their investment portfolio.
Investing can be a good way to put your money to work for you and grow your wealth over time.
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Diversify your portfolio
Diversification across and within a number of asset classes, across currencies, and geographies should help reduce the volatility of your portfolio over time and help deliver returns that are acceptable for the level of risk you are prepared to take.
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Be realistic
Be aware of what has been shown to be possible, in both up and down markets, which should inform and thus guide you to establish realistic expectations in terms of your current and future wealth. Do not make knee-jerk decisions.
Although at times it might be tempting to chase short-term gains or even to stop investing, making knee-jerk decisions is not always wise. Decisions made in haste are often regretted at leisure, and if made at all, are best kept small. During market declines, it can be tempting to sell or to stray from your plan. If you have a long-term plan, stick to it, but only invest money you expect you will not need for at least five years, while maintaining sufficient liquid funds for other shorter-term needs. You should expect to have a long-term plan challenged along the way by things such as life events, economic cycles, and other factors out of your direct control. A long-term plan should make allowances for such events.
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Consult with a professional
It can take years to develop the requisite knowledge simply to understand the markets and even with this knowledge, there are many extraneous, unforeseen circumstances that can impact your investments.
An investment manager will be part of a team monitoring markets, conducting research, and who will have acquired an informed understanding of the risks and opportunities associated with various asset classes. Pooling their expertise and capability gives a more rounded approach and can help reduce biases and decisions that are based on emotion.
Colin MacKenzie, Director, Investment Management said:
“We have seen numerous booms and corrections over the years. Although the past is not necessarily a perfect guide to the future, a diversified portfolio, invested over the long-term, should provide investors the best chance of seeing returns commensurate with their risk appetite.
“It is important to consider your personal appetite for risk, how much; you can stomach, and how much capital; you can afford to lose in the quest for attractive returns
“It is also important to seek advice or information from an expert. We live in a world where people are bombarded with information, much of it narrow in focus or delivered by people with social media clout, but not necessarily the credentials to back it up.
“We encourage our clients to take time to evaluate their options, to adopt a strategy that takes a long-term view, and not the chase short-term gains or employ excessive risk, thus putting their hard-earned money at risk.”
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DISCLAIMER
This communication should be considered a marketing communication. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research. It is for information purposes only and does not constitute advice, a solicitation, recommendation or an offer to buy or sell any security or other investment or banking product or service. You should seek professional advice before making any investment decision. The value of investments, and the income from them can fall as well as rise, and may be affected by exchange rate fluctuations. Investors could get back less than they invest. Past performance is not a reliable indicator of future results. The tax treatment of investments depends upon individual circumstances and may be subject to change.
The contents of this communication are based on opinions or conditions as at the date of writing and may change without notice. To the extent permitted by law or regulation, no warranty of accuracy or completeness of this information is given and no liability is accepted for its use or reliance on it.