Investment Planning

Investment planning, like all areas of financial planning, should always be in the service of your overall goals and aspirations. The financial planning process will reveal what levels of savings and investment growth will be required to achieve your targets, whether they be funding specific events like buying a house or covering university fees to maintaining a given lifestyle in retirement. Where income and saving capacity is limited it is often only possible to achieve your longer term goals by ensuring that your money has the opportunity to grow, but this also means exposure to more volatility or investment risk than when simply holding cash in a bank account.

So the first stage of the investment process is to establish and discuss your risk profile. This involves a combination of factors which help determine how much risk you are comfortable and able to take.

Firstly we quantify your risk capacity. This is the level of risk you can afford to take. Determining factors will include the time scale, whether you will be targeting an income or a specific lump sum, your reliance on the capital value being invested and whether you have other financial reserves, the likelihood of your needing to access funds earlier than intended and your overall wealth and savings etc. Your capacity to take risk is therefore based on an objective analysis of your total financial circumstances.

We then explore your psychological risk tolerance, the amount of risk you are actually comfortable taking on. Unlike risk capacity, this is very much a subjective factor. Some people are very comfortable with their investments fluctuating in value, while others find this rather difficult to deal with. An important insight into these attitudes is afforded through our psychometric questionnaire, but this is just one element of the process. The risk score generated through the questionnaire serves as an excellent starting to point to discuss your attitude to risk in general and how it should impact your overall planning strategy.

Finally we need to understand your perception of risk. Some investors can be nervous about investing when they have limited experience or knowledge about different asset classes and investments in general. Others might have a limited but positive experience which has led to overconfidence and to inappropriate risk exposure. Understanding how investments work and the type of returns various asset classes have historically delivered in relation to how volatile those returns have been is an important part of developing a realistic perception of investment risk.

Our role is to help each client understand the risks that are associated with every type of asset or position and to help you find the right balance between your risk profile and the risk needed to be taken to achieve your goals. Each element has to be properly considered and balanced. Just because you might be extremely comfortable with higher risk investments does not mean that you should necessarily hold them. If your circumstances inform us that you either don’t need to take much risk to achieve your goals, or perhaps that you could not afford to absorb much volatility, then we would avoid risk regardless of your psychological preferences.

Often we come across clients who have a much higher exposure to investment risk than they are aware of and then they actually need.

Beware of offshore advisers bearing gifts

Advisers often present themselves as expert wealth managers whose fund recommendations are certain to deliver high returns every year. Beware of this approach as it normally means they are trying to sell you something.

It is important to differentiate between what a proper financial adviser or planner actually does and the role of a professional wealth manager. The adviser’s role is not to manage your money on a daily basis, this is left to professional wealth and fund managers. Rather, your adviser’s role is to help you understand the various risks associated with holding any type of asset, from bank accounts to stock portfolios, and to match your needs, goals, circumstances and attitude to risk to an appropriate portfolio or range of investments and holdings that plugs into your overall financial planning strategy. Their role is to help you understand how investments and risk interact, and to identify the type of investments that would be appropriate and necessary for you to reach your longer term goals.

There are no magic solutions; all investments will rise and fall with underlying market movements or in certain economic conditions. The important thing is to have a realistic understanding of what to expect from any form of investment and to recognise the longer term purpose in holding it.

No one has a crystal ball but with the right advice and planning you can ensure that your investments are sensible, in the service of your overall plan and matching a level of risk and volatility that you both understand and are comfortable with.

Our Investment Solutions

A key component of your larger financial plan, at Chartered Global we help each client to devise an investment strategy and portfolio to match your specific needs, goals and attitude to risk. Because we are not driven by hidden commissions we are able to source the very best funds and investment solutions with absolutely no conflict of interest. 

Did you know? Many traditional international and offshore advisers completely ignore some of the best fund managers and investment solutions just because they do not pay upfront or ongoing trail commissions. Our transparent model means that we will tell you the truth about the very best investment solutions and options available to you. Isn’t it time you worked with an adviser who puts your interests first?

Tips on Successful Investing

Keep Your Costs Low
The commission world has created an abundance of seemingly attractive funds or structured products that need to make extremely high returns just to cover the many layers of fees being taken, while many traditional investment funds involve paying fees to managers who hardly ever outperform their benchmark indexes.

Most clients have relatively simple investment needs that can be met using low cost passive solutions. Our transparent fee model means that we have no hidden incentives when discussing your portfolio recommendations, as a result we tell you the real truth about investments and the high-cost funds so many other advisers are eager to sell you.

Asset Allocation Is A Key Factor In Investment Returns

Different financial conditions favour different asset classes and it is important that any management or portfolio solution enables you to take advantage of diversified investment opportunities. Strategic asset allocation also helps reduce volatility within your investment holdings.

Have realistic expectations and know why you are investing.

The financial crisis of 2008 was one of many unexpected events that have adversely affected the portfolios’ of many  investors. While markets generally recover from these larger losses, investing is an emotional experience and many people struggle to maintain an objective strategy during these difficult periods. Our role at Chartered Global is to help you understand how your investments fit into your overall financial planning, to prepare you for the emotional challenges that portfolio volatility can create and to ensure that you are always full cognisant of the larger why, and how your investments are but one component in service of your greater life plan.

Want to learn more about our investment and asset allocation solutions?