How hard could it be? “All you’ll need is a hammer and a screwdriver.” This was the advice I received from a friend when I needed to remove some shelving from my daughter’s room. Within minutes, vast swathes of wall had crumbled and my wife was on the phone to a builder. Years ago, before IKEA, men like me knew that DIY was a mistake. But the lure of cheap pre-fabricated furniture gave me reason to test whether I really could build a wardrobe from flat pack. While the instructions weren’t impossible, the tiny Allen key (which is apparently the only tool required) was more of a challenge. After two days my wife called the builder again.
For the do-it-yourself investor, there are more tools available than ever before. However, there are also very good reasons for sticking with professional services…
Keeping up with investments is an ongoing commitment that takes a lot of time. Most people would agree that time is the very thing they need more of, not less. Crucially, it is often ahead of major life events, the very busiest periods in our lives: marriage, birth of a child, buying a property, changing jobs, or even the death of a loved one, that you may need to adjust your investment portfolio.
Good investing takes a lot of discipline. Most investors make poor decisions because they are chasing the market and fund performance, or being too cautious or too aggressive, or responding to the emotional pressure in the rising and falling market, with a tendency to buy at the top and sell at the bottom. Emotional decision-making is perhaps the greatest cost of all. Advisers understand the upsides and downsides and at times of extreme market fluctuations keep a firm hand on the tiller.
Furthermore, you must regularly rebalance your portfolio to maintain the original allocation mix. This discipline forces the sale of assets that have done well and may mean reinvesting in assets that have done less well. This can feel counterintuitive, but it will keep your portfolio from becoming skewed over time and ensure that it remains constant.
3. Risk Management
Investments are never certain. But knowing your tolerance to risk and building a portfolio that spreads this risk through diversification is key to generating successful returns. If the two are not carefully aligned there is a strong possibility of disappointment at some stage in the future because either your goals will not be met, because you have taken insufficient risk, or you will have taken too much risk and will be perturbed by market events.
Diversification is more than just investing in a number of funds. You need to own assets that behave differently. This is why well-structured portfolios include widely diversified exposure to geographical regions and non-equity assets such as bonds and property.
One should not assume that investing requires little skill. Investing requires considerable skill to deliver the return on offer from the market. Quadrant Group has over two decades of investment experience managing wealth for a large number of clients. A financial planning process that is comprehensive and based on evidence through research, data and sound judgement is needed to identify the mix of assets that are likely to deliver the financial goals that you set and allow you to sleep at night.
Staying the course is essential for successful long term investing, and that requires confidence. Advisers that provide regular communications (such as our Insight sheets) and proactively meet face-to-face will help you to feel more informed and therefore more confident about your wealth. It can be difficult to maintain a long-term perspective, especially when markets are exuberant or in a mood of panic. To achieve your financial goals over the long term you must remain confident and keep your assurance in the future.
6. Staying Current
It’s our business to keep up with financial news, tax and interest rates, and government changes to investment regulations. Following current events is critical to making sound investment decisions and knowing how they will affect your financial plans. Advisers will keep you up-to-date when events may have an impact on your portfolio or a benefit that you should consider.
7. Bigger Picture
Most of my time with clients is spent helping them to understand how their wealth can work for them over the lifetime of their investment. I work with them to create a ‘big picture’ view of what this could offer for them and their loved ones.
It is not surprising how many people feel stressed with the responsibility of their wealth, and yet this can lead to a sense of burden that keeps them from focusing on what really matters. Advisers provide long term financial planning and clarity about decisions you make along the way.
In all walks of life, the fees that you pay need to make sense with the value you receive. In a recent blog on compounding – why 1% matters, I challenged the opaque costs of fund management and high price most investors pay through accumulated percentage charges. At Quadrant Group, we provide low cost portfolios that offer our clients a fair deal and exceptional value. For more about how we put these benefits into practice, read Tim Hale’s recent blog, “The Hidden Value of Great Financial Planning”.
If you have any questions, or if you’d like to agree or disagree with my points, leave me a note in the comments section below and I’ll get back to you. Alternatively, contact Quadrant Group today to talk about how we can help you invest your wealth and plan for the future.
This article does not constitute financial advice. Individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult your financial planner to take into account your particular investment objectives, financial situation and individual needs. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections.