Investments

If you’re asking what is the best investment? Then you’re starting at the wrong point.

There is no silver bullet when it comes to picking an investment.

Risk is an often-misunderstood part of investing. I’m sure you’re sitting there thinking, well I don’t want too to take too much risk, but what is risk?

In simple terms, risk is the chance of something happening that you did not expect.

For example, if you invest into the stock market, the expectation is that you will make money. An example of a risk is the chance that the market will crash and therefore you could lose money.

Market crashes happen from time to time and its virtually impossible to predict when it will happen and so the time you have available to invest becomes significant. 

If you have a lifetime of regular investing ahead of you, does it matter if there are a few bumps along the way?

Arguably, if you are investing monthly, you want the market to be lower as you’ll be able to buy more for your money. You only want the market to be high when you come to sell!

There are lots of different approaches to investing.

Details of our investment approach is found here.

When thinking about investments, here are 5 things you might want to think about:

• Time frame – how long do you plan on investing this money for? Is it to buy a house in the next 3 years or is it to fund your retirement in 20 years’ time? Perhaps you never plan on touching this money? Time frame has a huge impact on what the best investment is.

• Access – also known as liquidity. In a disaster, how quickly would you need to access this money? Some investments are designed to last many years and others can be traded more quickly. 

• Temperament – markets can fall as well as plummet and so how would you feel if you logged onto your account, and it was 10% down vs the last time you looked?

• Growth – what yearly growth do you need to achieve your goals?

• Expertise – Do you feel comfortable picking and managing investments? Have you ever reviewed where your pension is invested for example?

The best investment for you is some form of compromise of those 5 factors.

The value of investments can go down as well as up and you may get back less than the amount invested.