Whether you’re investing to grow your wealth or create a sizeable ‘nest egg’ for retirement, investing is a long-term endeavour. So here are some tips to help you make the most of your investment potential, now and over time.
Ask for help
Talking with a financial adviser who specialises in investment and retirement planning is a good place to start.
Trying to determine your investment strategy can be complicated, but also one of the most critical decisions you make. As financial advisers, we know just how important it is to seek expert help when gearing for your future. Having a specialist in your corner, to consult with and ask questions, can give you the confidence that you need to make well-informed decisions about your money.
Take stock of your financial life
Before you can start devising a long-term investment strategy, it’s important to take stock of your financial life – including your income, assets, and debts. Getting your finances in order can help you work out how much money you have available to invest, and whether you need to make any changes to your financial settings, to free up even more resources.
Understand your time horizon and attitude to risk
Your investment ‘time horizon’ (or timeline) is the length of time you need your portfolio to work for you. This depends on when the money is needed for a financial goal. For example, if you’re 35 and plan to retire at 65, your time horizon is thirty years.
Understanding your attitude to risk is also crucial. This is unique to you and determined by your capacity for loss – what impact a financial loss would have, both emotionally and financially – and your investment horizon.
Generally speaking, the longer your investment horizon is, the more time your funds have to grow, and the more risk you may be able to take with your investments (because you have longer to ride out short-term market volatility). As a result, certain investment types or funds may be more appropriate for your goals than others.
Of course, this is just a ‘rule of thumb’, so once again, consider talking with an adviser if you’d like to understand your situation in more detail.
Plan for a long life
With life expectancy increasing, when it comes to retirement planning and saving, planning for a long life is key.
Think about how much money you might need, factor in a longer life expectancy than the average, and consider what else you may do to make your retirement funds go further. For example, if you own your home, you might sell it and downsize, or move to a more affordable region.
Stick with your strategy (but also review it regularly)
Once you’ve established where you are at now and where you’d like to be, it’s important to pick a strategy and stick with it.
Investment markets will go up and down (it’s their nature). But as long as you choose an investment strategy that’s appropriate for your risk profile and time horizon, your investment funds are likely to ride out the downturns and increase over time.
On this note, it’s always a good idea to avoid impulse decisions, and keep in mind that you’re in it for the long haul.
At the same time, even though you’ve committed to sticking with your investment strategy, make sure you check in regularly and make adjustments. Think of your financial plan as a living breathing document: your circumstances and goals may change, and so might your investment needs.
The bottom line
If you’re investing for the long term, it can be tempting to set and forget, or make impulse decisions in the spur of the moment when markets underperform.
The key thing is to design a long-term investment strategy that’s consistent with who you are and where you’d like to be, and talking with an adviser can help you do just that.
For our part, we’re here to provide you with expert advice for safe, secure and financially sound UK Pension transfers. Get in touch if we can assist you in any way.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance. Past fund performance is no guarantee of future returns.