Ipswich Financial Adviser

Posts Tagged ‘risk’

When you are looking to invest money or invest within a pension, it is of paramount importance that you diversify where you invest your money.

There are many different asset classes that you can invest in such as, Equities, Bonds, Gilts, Property, Cash and Commodities to name some of them.

Ensuring that you invest in a spread of these means that you are not backing a one horse race. If you only invest in one area, you stand a good chance that you may not get the returns you had hoped for. However, if you spread your money between the various asset classes you ensure that you can make the most of all the investment opportunities that are available.

By diversifying you get the benefit of lowering your investment risk, but with the upside of potentially greater returns, a win / win situation.

You should always get professional help to ensure you have the right mix of investments and that the investment risk you want to take is matched by the spread of investments you put your money into. 

Getting the combination right can mean the difference between making a return or loosing money.

Please feel free to contact Thompson Financial Consulting Ltd, should you require any help or advice ion planning your investments or pensions.

The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested. Past performance is not a guide to future performance.

When you are looking to invest or put money away into a pension you MUST consider where you are going to place your money e.g. into what are you going to invest.

Are you going to invest in Equities, Property, Gilts, Bonds, Cash, Commodities etc, or a combination of these?

But this is not your only decision, once you know what asset class you are going to invest in (Equities, Property, Gilts, Bonds, Cash, Commodities etc) there are many sub sections to these investments. For example, Equities can be in different parts of the world, UK, North America, Europe, Asia, Emerging Markets etc.  So you need to decide on that.

Further more, there are more sub sections such as large, medium or small cap equities.

As you can see the choice is huge and that is ONLY ONE asset class. You need to consider all these options for all of the other areas to.

So the above is too difficult and you decide that you will invest in a “Managed Fund” so that the decisions are made for you, but how do you know the Managed Fund is any good and will provide you returns? How do you know that the investment risk rating of the fund matches the level of risk you want to take. Managed funds can range for 3 up to 9 out of 10 on investment risk ratings depending on how the fund manager invests the money! Would you want to take that much investment risk with your money without knowing?

This shows that you should get professional help in organising your investments and pensions, to ensure the money works as hard as possible for you.

Please feel free to contact Thompson Financial Consulting and we will be happy to guide you through the right investment choices for you.

The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested. Past performance is not a guide to future performance.

So what debt would you rather have? It is interesting when you start thinking about the consequences of the type of debts that many of us have.

Not all debt is necessarily bad, if you are borrowing money to buy an asset that appreciates in value or gives you a regular income or return, then the debt could be seen as being good. By borrowing money you can increase your overall wealth. The classic example of this is using a mortgage to buy a property. (but remember the bank can take the property away from you if you don’t keep up the repayments to the mortgage)

On the other hand ”bad debt” is taken out to buy something that falls in value or does not pay any sort of income or return to you.  Examples would be a car loan or credit cards. These debts can not add to your overall wealth.

What you want to do is repay any ”bad debt” you may have as quickly as possible and then look for opportunities to have “good debt” that could increase your overall wealth.

Remember borrowing any money always has a risk attached to it!! If you need any fianncial advice please contact Thompson Financial Consulting Ltd

Your home may be repossessed if you do not keep up repayments as your mortgage.

Investment Tips.

But what does this word RISK actually mean when you talk about investing, well it is really quite straight forward if you replace the word risk with “volatility” it becomes much clearer.  How much volatility, (the amount your money swings up and down in value),  are you prepared to accept within your investment. The more volatility you are prepared to accept the more  potential you have to increase the long term returns that you may receive.

This is one of the key things to consider when you are investing within (pensions, ISA’s, Unit Trusts, OEIC etc) as this will dictate the potential returns and losses you may receive.

I find when I asked my cleints about volatility NOT risk,  we can quickly and easily tailor an approach which is correct for them.

So if you haven’t thought about your investments or pensions in this way, do so and make changes to ensure you are comfortable with how your investments or pensions are set up. Please contact me if you need any help or advice.

Contact me at Thompson Financial Consulting Ltd

The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested. Past performance is not a guide to future performance.