Wirral Life May 2022 | Page 26

TRUSTED PRINCIPLES TO HELP YOU REACH YOUR INVESTMENT GOALS
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TRUSTED PRINCIPLES TO HELP YOU REACH YOUR INVESTMENT GOALS
by Sam Hulson of First Equitable
If you ’ re new to investing , knowing where to start can appear a daunting task . The reality is that people should start saving and investing as early as possible . The power of compounding provides a huge advantage to those who can put money aside and invest in the early stages of their lives and careers – and building an investment portfolio is one proven way to grow money and wealth .
Every investor needs to ask themselves the same basic questions before getting started . You need to have a clear understanding of your investment goals . What are you trying to achieve ? Are you looking for growth , income or both ? How much risk are you willing to take on ?
SET YOUR GOALS With a clear goal in mind , you can create a realistic plan for achieving your objectives within a certain time frame . Choosing the right investing strategy is important when shaping your financial plan and a goals-based approach to investing focuses on reaching life ’ s goals versus trying to get high returns on your investment portfolio .
Investors and retirees looking for reassurance during challenging stock market times can take heart from some time-tested investing principles . These principles can help you build an effective long-term strategy designed to achieve your financial goals and build financial wealth .
CREATE A PLAN & STICK TO IT It is one thing to have a target , but a sound investment strategy can make the difference between simply hoping for the best and actually achieving your investment goals . Investing often is just as important as starting early . This way , investing remains a priority for you throughout the year – not just around certain deadlines . Having a disciplined approach can help you build more wealth over time .
When you invest regularly , you can also ease into any type of market ( rising , falling , flat ). You don ’ t have to worry about trying to find the perfect time to invest . You can then review your plan regularly with your professional adviser and make adjustments when necessary , but staying focused on your plan will help you to not be distracted by short- term market uncertainty .
BE WARY OF THE CASH TRAP Cash can seem appealing as a safe and secure option – but inflation is likely to eat away at your savings as we have started to see recently , with UK inflation rising to its highest level in over 30 years . For longterm plans cash needs to be supplemented with investment in other asset classes that can beat the perils of inflation and offer better capital growth potential .
BENEFIT FROM DIVERSIFICATION When markets are fluctuating , it ’ s easy to worry about the performance of certain investments while forgetting about the bigger picture . But when one asset class is performing poorly , others may be flourishing . A diversified portfolio , including a range of different assets , can help to smooth out the ups and downs and avoid exposing your portfolio to undue risk .
START AS EARLY AS YOU CAN AFFORD Starting early is one of the best ways to build wealth . As a general rule , the earlier in life you start investing , the better your chances of longterm growth . This is due to the power of compounding . Compound growth ( the ability to grow an investment by reinvesting the earnings ) is a powerful force but it takes time to deliver .
‘ ACTIVITY BIAS ’: THE URGE TO ‘ JUST DO SOMETHING ’ Some investors suffer from what behaviourists call ‘ activity bias ’: the urge to ‘ just do something ’ in a crisis - whether the action will be helpful or not . When investments are falling in value , it can be tempting to abandon your plans and sell them – but this can be damaging because you won ’ t be able to benefit from any recovery in prices .
Markets go through cycles , and it ’ s important to accept that there will be good and bad years . Short-term dips in the market tend to be smoothed out over the long term , increasing the potential for healthy returns .
LET US HELP While the points above are good general tips , there ’ s no substitute for a strategy that ’ s tailored specifically for you . What ’ s more , in volatile times , professional financial advice can help you take the emotion out of investing and provide an objective view .
It is never too soon or too late to seek professional help . To discuss your plans or if you would like further information , please contact us for a free initial , and no obligation consultation . You can also email me at sam . hulson @ first-equitable . com
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