Investments

Bring direction to your investments

A lack of faith in the merit of pension plans is a major reason for the generally poor level of saving in the UK, yet there is no better guaranteed return than that granted immediately you make a pension contribution – particularly for higher-rate tax payers. There are three major reasons why portfolios under-perform:

1. Most portfolios are not actively managed

Many financial salespeople do not review their client’s funds and assets on a regular basis. Once an investment or pension plan has been sold, the salesperson – who usually only gets commission for the initial sale of the plan – moves on to other new prospects, and focuses less on their existing clients.

2. The single most important factor is a good spread of investment

Most people believe that market timing is a critical aspect of investment performance, but extensive research shows that only a tiny fraction of investment performance is determined by market timing. The major factor in long-term performance is actually determined by the allocation of assets in a portfolio. That’s why it’s important to review your portfolio on a regular basis, and make investment changes as required.

3. Higher charges than necessary for the administration of investments

To cost-effectively manage the asset allocation in an investment portfolio we need both choice and low switching charges.

A Balanced Portfolio

The bottom line is that no-one can predict the behaviour of the investment markets. All we can say is that over the long-term you are more likely to achieve growth than by leaving your money in an interest-bearing account.

What you can do is protect your portfolio by choosing a range of investments, and maintaining a balance between risk, growth, income, property, bonds and gilts.