Five Key Principles For Successful Investing

13.10.15

Please note that this article is over six months old. While Blevins Franks takes care to make sure that information is accurate on the date of publication, some content may change over time. You should not rely on the accuracy of legislation and tax information in this article; take professional advice for your circumstances.

There are five key aspects that need to be addressed to ensure you obtain the optimum investment portfolio to suit your personal situation.

There are five key aspects that need to be addressed to ensure you obtain the optimum investment portfolio to suit your personal situation.

1)    Tax considerations – choosing the right structure

A tax efficient structure can keep most of your investments in one place and provide protection to help you legitimately avoid paying too much tax.

UK nationals living abroad have to contend with a foreign tax system, often with frequent rule changes, so it is crucial to take advice from a specialist who is well-versed in the nuances of local taxation. Otherwise you may see your investment returns slashed by taxes – levies that could have been avoided or at least significantly reduced.

You also want to choose structures which provide estate planning benefits when your wealth is passed down to the next generations.

2)    Your appetite for risk

Exposure to market movements gives us a better chance of outperforming inflation and producing real returns over the medium to long term. However, the starting point has to be to obtain a clear and objective assessment of your appetite for risk, to ensure your portfolio is suitable for you.

At Blevins Franks we obtain a clear and objective assessment of your risk profile using sophisticated psychometric analysis developed with Oxford University academics, while taking account of your views and the aims you have for you and your family.

3)    Matching your risk profile to the optimum portfolio

Every set of investments can be forecast to display a given amplitude of risk. Low amplitude, less risk but also lower likely returns. A higher amplitude of risk brings greater potential returns. The key is ensuring your investment portfolio matches your attitude to risk. Without such a sound assessment being then matched to the optimum blend of investments, you could find yourself with a portfolio that is too risky or cautious for you.

You need to establish the investment portfolio that suits you best.

4)    Diversification

The next critical component is to ensure your investments are suitably diversified so you are not over-exposed to any given asset type, country, sector or stock.

By spreading across different asset types and markets, you give your portfolio the chance to produce positive returns over time without being vulnerable to any single area or stock under-performing.

This sound investment approach should be extended by one further step. A 'multi-manager' approach, where several different fund managers are blended together, reduces your reliance on any one investment manager making the right decisions in all market conditions.

5) Review

It is essential your portfolio is regularly reviewed. As asset values rise and fall, your portfolio can shift away from the one designed to match your risk profile and objectives. You may need to re-establish your original weighting. You should also consider if any of your circumstances have changed and whether your portfolio needs amending accordingly. Regular re-balancing helps control risk and can have a positive effect on performance.

Five key principles which help you have peace of mind – and at Blevins Franks these principles form the foundation of our specialised advisory service for wealth owning families.

Blevins Franks is a substantial, well established company. Our scale enables us to access some of the best investment managers in the world, normally beyond the reach of private clients. We are regulated by the Financial Conduct Authority in the UK and our Partners and Private Client Managers are highly experienced and qualified.

Our aim is to preserve the value of your wealth in real terms, during your lifetime and through to the next generations, with a service that is tailor-made to meet the particular requirements of your family. We develop good, long-term personal relationships with each client, to ensure you receive a high quality, bespoke service based on a full understanding of your circumstances and objectives.

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Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

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