Connect with us

Investing

WHY IT’S A GREAT TIME TO INVEST

Published

on

why it's a great time to invest

While the economic climate may have been rocky for the past few years, things certainly seem to be steadying themselves now. There is still an element of unease and people are, rightly, still wary about investing too much too soon but there is a solid argument that now is the perfect time to take the plunge and make a solid investment.

why it's a great time to invest

why it’s a great time to invest

Stocks and shares
The stock market is notoriously unpredictable and that is all part of the fun. There is never a good time to invest because the very nature of stocks and shares mean that they go up and down constantly. You could find that you invest your money into a particular company only to see the value of the shares come crashing down the following day.

It’s worth looking at the wider economic climate and keeping up with the latest happenings in politics if you want to try and make a good investment. Being aware of what’s going on in different countries could help you to spot a potential opportunity. If you are right, you could stand to make a lot of money from your investment.

Timing
There are many people who would say that while the chips are down, you should hold onto your money. Lots of big companies have gone under in recent years, some of which people thought would easily ride out the economic storm. As a consequence, a lot of investors have lost out on thousands of pounds because what seemed like solid investments went sour.
However, there is a flip side to this. When things look bleak, you may be able to make a fortune. If you pick the right company and buy stocks when they’re cheap, you could find yourself making quite a windfall if the prices rise. Similarly, if you sell when things are looking great, you could save yourself a loss in the future, should the prices drop again.

Savings
You may want to opt for a safer option and put you money into savings, rather than invest it in stocks and shares. While the stocks and shares could make you more money, they also have a higher element of risk. Put simply, the higher the dividends, the higher the risk. If you are happy to get a smaller amount back but remove some of the risks, a savings account could be a more logical option for you.

Many savings accounts still offer relatively good rates so you won’t necessarily lose out. It can mean that your money is put away for some time without you having access to it, so this is something to consider. However, in a different way to stocks and shares, as well as property investment, it is usually easier to get hold of it. You may have to close the account or pay a penalty but accessing money from a savings account is often quicker than having to wait on finding a buyer for a property or taking a risk with selling stocks and shares.

Property
There are people who opt to invest in property and now is an ideal time to do it. Although house prices have been rising throughout the year, many of the mortgage lenders state that prices are still significantly lower than the record levels reached just before the financial crisis. With that in mind, investing in property sooner rather than later could pay off.

Buying in a developing market could mean that you make a considerable sum when you come to sell. Although there is a similar element of risk to investing in stocks and shares, having additional properties can give you more of a safety net. Should the market start to flounder, you have the option of being able to rent the property out to bring in some extra cash. This will give you a regular monthly income to cover the cost of the mortgage and any bills or maintenance. Once the price of the property has risen to a level that you are happy with, you can then sell and make back some money, potentially giving you a considerable lump sum.

There are a number of different ways that you can invest your money and each offers a slightly different result. It is up to you to choose which one is going to be the most suitable for you, but bear in mind that investing it somewhere is highly likely to give you a better return in the long term than simply leaving it in a standard, current account.

This article is written by brand journalist, Lauren Sutton, and provided by Guardian Wealth Management, experts in financial planning. For more information on their services and products please call or visit them online.

Investing

UK leads the way in sustainable finance with the first set of requirements for investment management

Published

on

UK leads the way in sustainable finance with the first set of requirements for investment management 1

BSI, in its role as the UK National Standards Body, has today published the first specification for responsible and sustainable investment management. It addresses the policies and processes needed to create and embed a responsible approach to investment management.

It is the second publication from the Sustainable Finance Standardization Programme delivered in collaboration with the Department for Business, Energy and Industrial Strategy (BEIS) and the UK financial services industry in support of the UK Green Finance Strategy. Its launch coincides with the UK preparing to assume the G7 presidency and host next year’s UN Climate Change Conference (COP26), placing a spotlight on the need for business to unlock sustainable finance in order to build resilience, particularly for those operating in the world’s most climate vulnerable countries.

The new standard, PAS 7341:2020, Responsible and sustainable investment management – Specification, sets out the requirements to establish, implement and manage the process of integrating responsible and sustainable considerations into investment management.

It is structured across five key principles of sustainable investment:

  1. Governance and culture
  2. Strategy alignment
  3. Investment processes
  4. Investor rights and responsibilities
  5. Transparency

It underlines the importance of effective disclosure to appropriate stakeholders, and builds on existing industry guidance, principles and regulatory developments.

Scott Steedman, Director of Standards at BSI, said: “The financial system is playing a crucial role in helping to rebuild a more sustainable future through responsible economic growth. This is the first consensus for delivering responsible investment management at corporate level. The new standard, called PAS 7341, creates a way for financial management organizations to transition from ‘responsible’ to ‘sustainable’ investment management. In our role as the UK National Standards Body we are proud to support the government’s Green Finance Strategy with this globally relevant, pioneering and practical standard.”

Kwasi Kwarteng, Minister of State for Business, Energy and Clean Growth, said: “Transforming our financial system for a greener future is crucial as we build back better from Covid-19 and to meet our legally binding target for net zero carbon emissions by 2050. Building on our pioneering Green Finance Strategy, this new standard will help the UK investment sector become even more sustainable as we strive to lead the world in tackling climate change.”

This free to download standard has been produced by a steering group1 of technical experts made-up of organizations from the UK finance eco-system.

Continue Reading

Investing

Why investing should be treated like healthcare

Published

on

Why investing should be treated like healthcare 2

By Qiaojia Li, co-founder and CEO at the award winning wealthtech company, Rosecut

For many people, the process of investing can seem opaque and impenetrable, and filled with jargon.

They can see the potential benefits, but they can also see the Financial Conduct Authority (FCA) risk warnings.

Despite – or perhaps because of – this, the long-term trend suggests that more individuals are open to investing. One set of statistics suggests the percentage of individuals investing in stocks and shares in the UK grew nearly three per cent between 2010 and 2018.

Here are four steps for sensible investing:

1. Figure out why you invest, ahead of everything else

The key here is knowing what the overall goal is.

It is a constant source of amazement that when it comes to investing, few people stop to consider why they are actually doing it. Whether they have £100 or £100,000, many do not think about how their approach should be dictated by their overall goals.

For instance, someone looking to buy a house in the next 12 to 24 months should not be looking to dive into the world of bonds and equities, because they have a short-term target which requires reasonably fast access to cash. Tying their resources up in different funds and stocks will not only limit how quickly they can get their hands on their money when it comes to putting down a deposit, but they will not see the return that they would expect due to the short term price fluctuation of these assets. They would be better using a Cash ISA and enjoying the tax-free allowance.

On the other hand, if they have spare cash lying around that they won’t need for the next 3-5 years or longer, or they want to get a headstart on earning their retirement or long-term financial freedom, investing into financial markets is the way to generate compound return. That will give them a chance to beat inflation and, in all likelihood, it will give them a higher return than real estate would.

It is like any big project – determining the overall goal informs the strategy, which dictates the tactics. In the world of investment, this means management. Yet even deciding what goals they are working towards can be challenging for some people – they might have overinflated ideas or be too conservative.

This is where independent, objective, and knowledgeable financial planning comes in. By giving an individual’s finances a thorough check-up – much like visiting a GP – a qualified and experienced financial planner can consider circumstances, wishes and constraints. Only when this has been completed can they assess how feasible a client’s goals are, and the client can start considering how they should invest.

It needs to be a bespoke diagnostic and prescription process, in much the same way that a trip to the doctor requires the practitioner to have an understanding of any contributing factors and your medical history.

2. Seek professional help

If you were going to buy a property, you would look for a capable and qualified property lawyer instead of reading legal textbooks and undertaking training. The same logic applies to other professional advice, such as accounting, medical treatment and tax. Strangely, though, when it comes to investing, many people attempt to teach themselves.

While this approach is to be applauded, and there is certainly a huge amount of information readily available within a couple of clicks, the intricacies and vagaries of asset classes and funds, opposing investment styles, individual savings accounts and a hundred and one other terms can be overwhelming.

Forging ahead without professional guidance is a bit like having a pain in your hand and deciding to do a bit of exploratory surgery based on watching medical documentaries – there is only a slim possibility everything will turn out fine. This is why 99% of people have lost money by DIY-ing their own investments. It is a risky learning curve that, frankly, is better outsourced.  Learning how to find a good investment provider can be a more efficient and less risky use of your time.

3. Do not trade

Qiaojia Li

Qiaojia Li

In the report quoted above, there is an alarming line: “Investors are now holding onto their shares for 0.8 years on average before selling them. In 1980, the average was 9.7 years, representing a decline of 91.75%.”

The proliferation of trading apps brings convenience and lowers barriers, helping people to access financial products, but the user friendliness of the technology often encourages over engagement at a real financial cost.

On an individual basis, each time you buy and sell any financial product (not just shares, but funds too)  you lose a tiny slice of your capital, even if you can trade for free – this is due to “spread” which, put simply,  is the price difference between purchase price and sale price. As you trade, this quickly adds up and eats into your principal, which you need to earn back before seeing any profit. This is a direct cost, in addition to the time you invest, checking the share price several times a day, the sleep you lose during volatile days, and the potential for developing an addiction, which is a common result of trading. Take a look at your work pension investment report if you have any – there is a reason why professional investors don’t buy and sell frequently.

On a collective basis, crowd trading behaviour drives more “boom and bust” cycles of financial markets, which has happened many times before and will continue to happen in the future. It is a more pronounced characteristic of less developed financial markets where there are fewer professional/institutional investors to stabilise  the market for everyone’s benefit.

4. Diversify globally, meaningfully

Sensible investing requires a skillset that is the opposite of most professional careers or entrepreneurship. In the latter, one strives to become an expert in a chosen arena in order to command the highest possible pay or profit margin. A wise investor, meanwhile, needs to be a generalist rather than a specialist, and investing is about hedging all possible risks before seeking a return. One of the biggest principles to reduce risk is to diversify on various levels:

  • Your holding currency – for example, GBP has lost more than 15% in value against USD compared to the pre-Brexit high of five years ago, so it is a bad idea to hold all your assets in GBP only
  • Your country/geography exposure – for example, you can buy GBP priced US assets, or USD priced US assets, such as S&P 500 tracker, to have a slice of US economy growth. We strongly encourage people to consider a globally diversified portfolio, for the reason that different economies go through business cycles and are at different stages at any given point of time. With a globally diversified portfolio, you can always benefit from the growth of some country, somewhere, at any given point of time
  • Asset classes – If all your money is in London real estate, for example, you are likely to have felt some value depreciation since 2014. You take a risk if you tie your financial future to a single city’s economic cycle and potential rise and fall.
  • Industry allocation – as a former banker I never bought banking stocks or bonds, simply because my job and salary were already tied to the UK banking sector, and owning a piece of banks is like doubling down in a casino – not wise for risk mitigation. This is an often overlooked risk – people like to invest into companies and sectors they know well, typically from professional exposure and “inside knowledge” but this leads to blind spots and concentration risk.

Investing should be part of one’s long term financial strategy hence there is no one size fits all recommendation that I could give here. A simple step by step guide is:

1. Save a good portion of your monthly income, that allows you to enjoy your current life but also prepare for the future

2. Shortlist 3 financial planners (include Rosecut as one option) and pick one that you feel you can trust and who is cost effective to lay out your big picture and future plan

3. Invest regularly into a globally diversified, professionally managed portfolio that fits with your future goal and then make minimal changes. Ideally you should only even consider changing on an annual basis

4. Learn from this loop, iterate and optimise, ask many questions along the way!

Rosecut is a financial planning partner and investment manager, giving access to the knowledge you need to plan for the future you want. Start your free financial health check today at https://app.rosecut.com/ or download the app.

Continue Reading

Investing

Are clients truly getting value from their BR solution?

Published

on

Are clients truly getting value from their BR solution? 3

By Matt Dickens, Senior Business Development Director at Ingenious

Financial planners and wealth managers strive to deliver on the needs of their clients by always providing the most suitable and effective advice. But as with any service, this advice should also be delivered at the best possible value for the investor. Value can be simplistically defined as the service that delivers the most benefit, balanced against the financial cost, but in the estate planning space, how do you assess what good value is?

1. Total fees and charges

Product fees are guaranteed to negatively impact returns, so it is important to minimise their impact when looking to gain the best value from the investment. Some managers report little or no fees paid by the investor to the manager, but instead charge the company or investment service itself. While this might initially be seen as better value for the investor, it is not as simple as that. Investors in unlisted BR services become a shareholder of the portfolio companies, so the reality is that any fees paid by the companies are effectively being paid by the shareholder (or investor). Therefore, both investor fees and company fees will both negatively impact the final return and must be considered together.

Analysis of what a manager is paid by the investor and by the company over a significant period will enable an adviser to conclude if the manager is offering good value, or if a disproportionate amount of fees is going to the manager at the expense of their investors.

2. Real investment returns

Another key component of assessing value is what the investment actually delivers. For BR solutions, investors’ main objective is commonly to pass on the maximum sum possible to their beneficiaries upon death. This may lead to a conclusion that delivering Inheritance Tax relief at the lowest possible cost is the primary driver of value. However, especially for clients with longer time horizons, the one-dimensional goal of avoiding a potential 40% Inheritance Tax bill can easily over-shadow the equally important goal of aiming to steadily grow the investment, preventing erosion by inflation, drawdowns and investment fees. Unlike some IHT-focused solutions, such as trusts or gifting, investors in BR services do not have to accept zero growth of their wealth from the point of investment.  Instead, investors can continue to earn returns, either taking an income stream or increasing the final sum to be passed onto their beneficiaries, precisely in line with their original objective.

While most BR managers predict their ongoing returns at a certain level, those targets are not guaranteed and historic performance varies widely.

3. The relationship between fees and risk

Given that the majority of managers in the BR space state their performance targets net of fees, to produce positive growth and achieve their target return, those managers must first earn back any fees they are taking. Let’s take the below scenario to illustrate this point.

 Are clients truly getting value from their BR solution? 4Manager 1

Annual performance target, net of fees: 3%

Annual fees: 3%

Gross performance target: 6%

 

Are clients truly getting value from their BR solution? 5Manager 2

Annual performance target, net of fees: 4%

Annual fees: 1%

Gross performance target: 5%

Initially, it might appear that Manager 2 must be taking more risk to target a higher net return of 4% than Manager 1, who is targeting 3%. However, Manager 1 has to deliver an additional 2% of gross return than Manager 2, to make up for charging higher fees. Higher fees not only impact returns and value, but they can also mean greater risk.

Market comparison

In the Tax Efficient Review’s most recent analysis of Unlisted BR Services1, they released data that ranks services in the market in terms of both investor returns and total fees. IEP Private Real Estate achieved the top rank for returns delivered, with the second lowest total fees in the market, demonstrating that it represents attractive value for investors in comparison to other services.

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2020
2020 Global Banking & Finance Awards now open. Click Here

Latest Articles

How Long Does It Take to Get Approved for an Online Personal Loan? 6 How Long Does It Take to Get Approved for an Online Personal Loan? 7
Finance2 hours ago

How Long Does It Take to Get Approved for an Online Personal Loan?

One of the best loan types to consider if you want to borrow a sum of cash for an emergency...

Insurtech: Why Established Players Need to Act Fast 8 Insurtech: Why Established Players Need to Act Fast 9
Technology3 hours ago

Insurtech: Why Established Players Need to Act Fast

Technology-led disruptive business models are already here and changing the game By Will Andrews, Director, Trianz and Satya Madakshira, Director,...

The UK’s National Data Strategy – Too Much Love? 10 The UK’s National Data Strategy – Too Much Love? 11
Top Stories20 hours ago

The UK’s National Data Strategy – Too Much Love?

By Julian Hayes, Partner at BCL Solicitors LLP “We want the UK….to be the best place in the world to...

B2B plays a big role in our economy, but how can it contribute to our recovery? 12 B2B plays a big role in our economy, but how can it contribute to our recovery? 13
Business20 hours ago

B2B plays a big role in our economy, but how can it contribute to our recovery?

By Richard Parsons from True, creative B2B marketing agency, discusses the current state of marketing and looks ahead to what...

UK leads the way in sustainable finance with the first set of requirements for investment management 14 UK leads the way in sustainable finance with the first set of requirements for investment management 15
Investing21 hours ago

UK leads the way in sustainable finance with the first set of requirements for investment management

BSI, in its role as the UK National Standards Body, has today published the first specification for responsible and sustainable...

Why investing should be treated like healthcare 16 Why investing should be treated like healthcare 17
Investing1 day ago

Why investing should be treated like healthcare

By Qiaojia Li, co-founder and CEO at the award winning wealthtech company, Rosecut For many people, the process of investing...

Endpoint Security Industry: An Overview 18 Endpoint Security Industry: An Overview 19
Technology1 day ago

Endpoint Security Industry: An Overview

Endpoint protection is the practice of stopping unauthorised actors and campaigns from targeting endpoints or access points of end-user computers...

Tech-enabled cash management strategies have come to the fore during the Covid-19 pandemic – and will be key to firms’ recovery from it 20 Tech-enabled cash management strategies have come to the fore during the Covid-19 pandemic – and will be key to firms’ recovery from it 21
Finance1 day ago

Tech-enabled cash management strategies have come to the fore during the Covid-19 pandemic – and will be key to firms’ recovery from it

By Ed Thurman, managing director and head of Global Transaction Banking at Lloyds Bank Commercial Banking, outlines how technology-enabled solutions are...

5 ways to keep your team connected with split working 22 5 ways to keep your team connected with split working 23
Business1 day ago

5 ways to keep your team connected with split working

By Sam Hill, Head of People and Culture at BizSpace  As the government switches its message back to “work from...

How to overcome the ‘groundhog day’ effect Of remote working 24 How to overcome the ‘groundhog day’ effect Of remote working 25
Top Stories1 day ago

How to overcome the ‘groundhog day’ effect Of remote working

By Chris Farmer, leadership and management training expert and founder of Corporate Coach Group The ongoing pandemic means that for...

Newsletters with Secrets & Analysis. Subscribe Now