Striking the correct balance between risk and reward

When investing for the long term, for example 10 or 20 years, you can expect your investment to increase in value but should be aware hat value can fluctuate. As a general rule, the higher the risk involved in any particular investment, the higher the potential return, but fluctuation can mean the opposite is possible. However, there are steps you can take to limit exposure to fluctuation whether you have nvested a lump sum, a monthly amount or a combination of both. Choosing the amount and the manner in which you invest is entirely up to you and your E&G adviser can help you decide. Your adviser can also help you take the necessary steps to limit your exposure to value fluctuations.

Pooling resources to spread the risk

Few people invest directly in stocks and shares. Most will invest in funds managed by professional fund managers. In a fund, your money is pooled with that of other investors and the fund manager invests this collective capital in one or more asset classes which are typically shares, bonds, gilts and cash, in the UK and other markets. Investing in different assets, which can include ISAs, helps to spread the investment risk because a stronger performance in one asset can compensate for a poorer performance in another.

Creating a balanced investment portfolio

If you already invest - and depending on when you started - it’s likely you spread that investment across at least two asset classes - for example equity funds

(such as stocks and shares) and bonds - but as you get older or closer to retirement, you may consider reducing risk by switching to interest based investment funds. This is called ‘rebalancing your portfolio’ and can mean liquidating some assets while investing in others. The objective of rebalancing is to control exposure to risk, not to maximise performance. Ideally you should review and rebalance your assets annually. Doing so allows you to check that your investments continue to meet long term goals and desired level of risk.

This is called ‘rebalancing your portfolio’ and can mean liquidating some assets while investing in others. The objective of rebalancing is to control exposure to risk, not to maximise performance. Ideally you should review and rebalance your assets annually. Doing so allows you to check that your investments continue to meet long term goals and desired level of risk.

Setting up Stocks & Shares ISAs

Many people are attracted to Stocks & Shares ISAs because returns on the original investments are free from any tax liability. Your E&G adviser can set up a Stocks & Shares ISA for you and can also help organise Cash ISAs as part of your portfolio.

How your E&G adviser can help

While investing in funds can be safer than investing in individual shares, the recognition that some funds take more risks than others is why many people seek professional help. So one of the most important aspects of the decision-making process is understanding your views about risk and return. There is no right or wrong view - it’s a personal decision - but one your E&G adviser needs to know. Your adviser will also take into account your long term financial goals, your age, the number of years you plan to invest and any other financial arrangements you may have. Using this information and by employing their experience and

research skills your adviser will construct an appropriate investment strategy and programme. Irrespective of the funds involved our aim is to maximise returns and minimise the risks but you should be aware that the value of your investment can go down as well as up.

The Online Portal

Our completely secure and password protected Personal Finance Portal, accessed via this website, allows you to monitor and manage your investments in one place via your desktop, mobile or tablet at any time as well as providing up-to-date valuations of your own investments. You can see how other funds are performing, view new investment opportunities and set up watch lists to stay abreast of selected funds.

Help & Information

If you would like further information on how E&G can help you with advice on investment, please call us on 020 8396 0486 or email us at cds@eandgfs.com.