Do you understand the investment options that are on offer? Do you feel overwhelmed and uncertain of their meaning?
Let’s make it simple:
Strategic Asset Allocation – diversifying your investments across different asset classes such as stocks, bonds, property, and even cash to spread your risk – accounts for about 80% of investment performance – meaning that if you’re invested in the wrong areas, you won’t get the best performance.
If you do nothing else, but get this right, then you are already 80% of the way there.
Tactical Asset Allocation – picking the right asset classes to be overweight in – requires more in-depth knowledge and carries more risk, yet only makes up 10% of investment returns.
The last 10% comes from using the right financial instruments – just in case you were curious! And that requires even more knowledge and skill.
Risk Management: Just how much risk do you want to take? Do you even understand what investment risk is and how you can use it to your advantage? For instance, younger investors might lean towards more aggressive strategies, whereas older investors might prefer safer, income-generating assets.
Regular Reviews: Adjusting your portfolio regularly – at the very least annually – to align with market changes and personal circumstances makes sure that your investments remain current and more likely to perform.
Empowering yourself with these key financial principles can dramatically improve your investment confidence and success.
The problems start when emotions begin to be included in the equation – looking after your own money is much more difficult than looking after someone else’s. Investments don’t care about emotions – whether you are attached to a particular asset or stock. Whether you want to be in profit before selling – even though that investment has no chance of ever making a profit.
And that’s where taking professional financial advice comes in – someone else is looking at your money without the emotional baggage. Someone who not only gets the 80% right but who can give you a better chance of getting the other 20% right. It is these marginal gains that, applied consistently over time, give you the best chance of getting the most from your money – leaving you to get on with everything else that you enjoy doing.
If you would like to understand more about how the Foresight Quantum Programme could help make a difference, then please get in touch
