Top tips for managing your wealth

Here are our top tips for accumulating and managing wealth – the secrets of successful investment.

1 Have a plan

Random doesn’t work. Rapid buying and selling doesn’t work. Discipline does.

If you look at the financial markets you’ll see an enormous array of opportunities to invest your money. Study them for a few days and you might think you see trends emerging. Stop there. You need a plan. Without knowing what you want your investments to do for you, and a timeframe during which you’d like that to happen, you’re in danger of making random decisions.

Once you have a plan – perhaps an early retirement in ten years’ time, perhaps a university fund for the children or grandchildren – you have a sense of scale. You need to consider your responsibilities and commitments and how much risk you can afford to take, and weigh these up along with long-term financial planning. As experienced financial advisers we know how to pick out the investments that will perform in the long run – and tie in with your plan – rather than those which might fluctuate far too frequently and put your money at risk.

Then you need to avoid the temptation to ditch those carefully considered investments if they seem to drop short-term, or you see something in the market that seems to gleam and beckon. Stick to your investments, stick to the plan. Be patient.


2 Make a will and keep it up to date

When people don’t make a will, they leave their money at the mercy of intestacy laws. Don’t assume that the people who you most want – and who most need – to benefit from your hard work and sage investments will actually receive what you’d like them to. Not making a will can leave partners without a roof over their heads, children inheriting all your money but with no right to spend it, and the Treasury your primary beneficiary. We’ve seen too many people bury their heads in the sand over their deaths and this is never more true than of people below retirement age. It’s a mistake that can prove costly to contest for your family and adds stress and financial difficulty to the pain of losing a loved one.

According to the BBC, only three in ten people in the UK have made a will. Every year the government earns tens of millions of pounds from people who died intestate. The more complicated your wishes and the larger your family, the more important it becomes. If you have previous marriages, step-children or a co-habiting partner, there could be complications after your death without a will in place to lay out your wishes. There’s little point in having a plan and beginning to accumulate wealth if the right people won’t benefit if the worst should happen.


3 Put a Lasting Power of Attorney in place

A lasting power of attorney (LPA) gives the appointed person the legal authority to look after either or both of your financial affairs and healthcare if something happens that means you can’t make those decisions for yourself. It’s an overlooked area of financial planning, particularly with younger generations. But LPAs aren’t just for the elderly; accidents and illness can and do befall young people with families.

Without appointing lasting power of attorney, if you become mentally incapacitated your family could be faced with long delays and additional expense in order to take control of your finances and assets. If they’re unsuccessful, the court-appointed deputy may lack the personal insight needed to manage your healthcare and financial commitments to your liking.

LPAs are recognised by financial institutions, care homes, government departments and local authorities, as well as tax, benefits and pension authorities. We think they’re an important part of long-term care planning.


4 Time in the market, not timing the market

You are not a trader. Any investments you make should be considered purchases to keep. Watching every movement in the market, a copy of the FT – creased through anxious clutching – in your hand is not the route to a secure future. That’s a bit like being a farmer who keeps digging his crops up to make sure the roots are growing!

Instead, you should be holding quality assets and reinvesting the dividends. Albert Einstein described compounding interest as one of the greatest forces on earth! Our clients who stick to their plan and keep their eyes firmly on the long-term prize are the ones who get there with a smile on their face and a twinkle in their eye.


5 Hold good quality investments

Unsurprisingly, the success of your overall investment strategy is only as good as the quality of the individual investments. In our experience it is the high quality investments that can deliver the kind of solid long-term rewards on which your future will depend.

That is why we insist that any fund used on our portfolios has a proven track record of at least five years and has been a consistent, high performer over the last one, three and five-year periods. Each quarter we review the performance of the main sectors to help formulate quarterly and annual recommendations for clients of our Lifestyle Financial Planning and Financial Advice Services.


6 Diversify to spread your risk

Just like putting all your eggs in one basket, any investment carries a certain amount of risk. There are no guarantees and, while an experienced financial adviser can guide you wisely, the unexpected can still happen. We assess your attitude towards risk and help you to choose a portfolio that is diversified and with the right asset allocation for your risk profile.

Depending on how much you have to invest, your commitments and your plan, we’ll help you create a well-balanced portfolio that may include cash, bond and gilt funds, collective investments, for example, unit and investment trusts, and packaged products such as insurance company bonds.


7 Revisit the plan

Starting your portfolio is just that: the start. Your plans need revisiting and assessing annually. Your circumstances will change and there could be changes to taxation legislation. An annual review is a good chance to examine the way the various investments you’ve made are performing and see if the projections are still on track to deliver your ultimate goals. Beware of overreacting to any underperformance; remember, it’s time in the market, not timing the market that counts.

Provided that the initial choices you’ve made are good, managing your investments successfully is largely down to patience and restraint. Without financial advice from experts used to seeing a large number of diverse portfolios perform over a long period of time, placing your money can be something of a gamble.


If you’d like help with investment advice, lifestyle financial planning or managing a particular aspect of your finances, give us a call for a no-obligation chat on 01923 270036. You might also like to sign up to our regular newsletters, which feature all sorts of investment tips and wealth management guidance.

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