An Introduction to Investment
Getting Started
How to Build an Outstanding Investment Portfolio
There are many reasons for investing and no two people hold the same objectives. For some it could be to build a retirement fund, for others it could be to invest for a Childs future university costs.
You might have already retired and need to ensure that your investments are secure.
Alternatively you might be prepared to accept a higher exposure to risk in return for potentially higher returns.
To the inexperienced investor, the world of investment can seem like a daunting place. Consulting a financial adviser before making an important investment seems a very sensible thing to do.
Your age may dictate how long you would like to invest for. For example a young professional investing into a pension may be more likely to take higher levels of risk due to the time available to recoup any short-term loss. Alternatively a retired couple may be much more cautious as they will be keen to preserve capital to support their retirement.
The level of risk you may be willing to accept, as an investor is a vitally important first step for you to take.
Our process follows a structured and disciplined approach to understand your attitude to risk. This is covered in detail at our initial meeting with you, which we will not charge you for.
Step 1 - We Calculate your Attitude to Risk Objectively
We need to understand your investment objectives and the amount of funds required to achieve your personal goals.
We use a sophisticated risk profile questionnaire to understand your objectives and attitudes to risk using a wide range of scenarios.
The results quantifies your risk by means of a risk profile score with 1 being low risk and 10 being the highest risk.
Our attitudes to risk are subjective and vary over time as our life styles change, so we believe it is essential to re-look at your risk questionnaire on an annual basis with one of our consultants.
We believe that risk profiling is the most important step in the investment process and one that often leads to a great deal of debate with our clients, particularly between partners, as each individual will invariably have a different view about risk.
Step 2 - Building an Outstanding Portfolio
Investing is not about gambling or speculating it is about taking reasonable financial risk to achieve your desired goals and objectives.
Asset Allocation
Stock markets have historically provided investors with better long-term returns, although in times of turbulent markets it can be prudent to consider other types of assets such as bonds, property, commodities or cash.
Each of these have a very low correlation with equities, so when shares fall in value, there is the opportunity to have some investments grow.
We firmly believe that it is asset allocation and diversification within an individuals risk profile as apposed to stock picking that will achieve the desired investment objectives.
Asset Allocation is the process of dividing investments amongst assets such as the above and shares, to optimise the risk/reward trade off based on an individuals specific situation or goals.
We will take into consideration your investment objectives and your risk profile to establish the most appropriate blend of asset classes.
Step 3 - Reviewing your Investment Portfolio
Having now built your portfolio, it is important that we continually review its progress.
The financial markets do constantly change, regularly producing new opportunities for growth and prosperity.
Markets may decline forcing you to review your portfolio, which in turn could lead to reviewing the assets allocation to meet your changing requirements.
We will work with you to objectively re-analyse the progress of your portfolio and rebalance accordingly.
It is possible to build a comprehensive portfolio of investments to suit the risk profile and goals of each individual investor.
Building a truly diversified portfolio is a complex process and using qualified financial advisers expertise in this area is recommended.
We believe that the comprehensive and robust service that we offer at Oyster Independent Financial Advisers Ltd with our clients as covered above sets us apart from that available in the market place today.
For independent financial advice you can trust please contact us today on 01142 559944 email us at info@oysterifa.co.uk or complete the enquiries form in the contact us section of the website.