Despite the impression given by the media, and by many professional investors, successful investment does not require unnatural levels of luck or even unusual levels of genius.
It requires some knowledge, certainly, but the main qualities required are patience, and a sound management strategy.
At Continuum, we help our clients develop the investment management strategies they need.
There is more to investing than simply buying shares you like the sound of and sitting back and hoping. You could be lucky, but the chances are that you could be much luckier with a management strategy.
An investment management strategy is a set of rules or objectives that guide your selection of an investment portfolio. It should reflect your financial objectives, your attitude to risk and your timescales – and it should be based on some sound foundations.
Always invest for the long term
Investment works because it lets you buy into productive businesses and share in their profits. Trying to time the market, by buying cheap and selling dear may sound like a strategy, but buying stock when it is in a trough, and selling when it hits a peak is not as straightforward as it sounds. It is impossible to know just when those peaks and troughs are coming.
Staying invested for a minimum of five years can offset the ups and downs and let the underlying growth in the value of your investment work for you.
You need an investment strategy that works for the long term, rather than trying to make short term gains
Always expect volatility
When the price of one of your holdings falls, it is worrying, but when investing, what goes down can also possibly go up. You will have good and bad years, but if you take a long-term view, and have the right holdings, any losses in the bad years should be more than made up for in the good years.
Your investment strategy needs to include understanding of the various market sectors – and awareness of how they are likely to perform.
Always make risk work for you
All investments come with some level of risk and you must be comfortable with how much risk you carry in your portfolio.
We can make risk work for you by completing a detailed Risk Profile Questionnaire which allows us to assess your attitude to risk in line with your financial goals and objectives.
Your investment management strategy must reflect the level of risk you are comfortable with. It may change as the years go by.
Whatever your view of risk, you should never put all your investment eggs in one basket.
A diversified portfolio, made up of different types of assets, industries and locations is essential. When one part of the market dips, another may be rising, hopefully covering your losses.
This means that your portfolio will be varied. Fortunately, there are diversified funds that can help you spread the risk, even if the amount you have to invest is small.
Your investment management strategy must spread your investments to limit your exposure to downturns in a particular market or sector.
Always get expert help
An expert adviser is vital when you are planning your investment management strategy. At Continuum, we can provide the expertise you need. We will work with you to design the investment management strategy that’s right for you – and help you build a portfolio based on it.
We combine a thorough understanding of the basics with current market knowledge. It means that we can help you plan the style of investment portfolio you need, and help you keep it current, and performing as it should.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
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