Why should you invest?
The foundation of any successful investment strategy is a clear understanding of your short, medium and long-term financial objectives.
The most common objectives tend to be mortgage repayment, saving for retirement or paying school and university fees.
Goals which fall within the next 6-24 months where you need easy access to funds. For example, paying for a wedding, a new car or home renovations.
Goals you wish to achieve within the next 2-5 years, for example, paying university fees or providing a relative with a deposit for a house.
Goals you wish to achieve in the next 5-10 years and beyond, for example, paying off your mortgage or maintaining your desired standard of living through retirement.
Next, you need to understand the following:
- What financial assets you already have that you can use to achieve your goals.
- What investment return you require to achieve your financial objective.
- Whether additional savings may be required now or in the future.
This prompts two questions: How much risk are you willing to take to reach your goals? Could you make up the difference in returns if an investment suffers from unfavourable market conditions?
No two people are the same. So to help your Financial Adviser build a portfolio you’re comfortable with and provide the best chance of achieving your goals it is essential you understand the basic concepts of investment risk and return.
Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.