Where should I invest my money or save for the future (decisions, decisions, decisions)?

Most savings and investment funds designed for medium to long term investment fall into one of four sectors. Portfolios are then built using either a single asset class or, much more commonly, a combination of some or all of these:

Cash – To provide liquidity without selling down other longer term investments or for short term saving/ emergency funds. Low risk but also minimal returns.

Fixed Interest – Typically loans to Governments and/or companies that, in return, pay interest back to the investor. Usually a better return than Cash but with a degree of risk. depending on the financial strength of the borrower.

Commercial Property – Most likely an office block, shopping centre, warehouse or car park. Here the risks of falling property values and a lack of a tenant are balanced against long term increases in property values and income from users of the property. The returns can exceed Fixed Interest but can be a higher risk

Equities – There are two main considerations – where and what. Stocks and Shares may be concentrated in one geographical area, such as the UK, or may be widely invested across the world. The underlying assets may be focused on one asset class, such as manufacturing, financial services, infrastructure, retail or agriculture, or mixed to spread risk. This category of investment carries greater risk but also potentially greater returns over the medium to long term.

An example savings and investment portfolio might have 8% in Cash, 35% in Fixed Interest, 12% in Property and 45% in Equities. A portfolio with a higher Equity content might be viewed as more adventurous and one with more Fixed Interest might be seen to be more cautious. The trick is to correctly blend these four sectors to reflect a client’s expectations and objectives.

This is where expert advice from an Independent Financial Adviser comes in. They will set up the initial portfolio, ensuring tax efficiency, and help monitor and advise as needs and circumstances change – yes, investments can go down as well as up!

To explore the possibilities of building a sound investment strategy for you or your family, contact an Independent Financial Adviser for a free initial consultation.

Eamonn Dorling Dip PFS, Senior Independent Financial Adviser, Brooks Wealth Management