Everything You Need To Know
- Risk and return are linked. Risk is nuanced – not all or nothing, but a matter of degree.
- There’s really only one major risk. The main risk to us as individual investors is that we DO run out of money.
- Risk can lead to bad behaviour.
Everything You Need To Do
- Know yourself. When you think about risk, how do you feel? It’s your money and the one responsible for making decisions is you, so you must know your investing personality.
- Know your investments – watch and learn. Just need to understand that they go up and down and sometimes by large amounts. Time is a great healer. Markets march relentlessly upwards given enough time – your investments will too.
- Start balanced and work up. If you’re a new investor, or you think you need to reset this – start with a balanced portfolio. We’d call that about 60% equities and 40% bonds and other stuff. You could invest differently in two different accounts – Pension and ISA, say. Go up the risk scale (more equities) in the longer-term pot, usually the pension. Remember that investing is a long-term game. A year is nothing – we should think in decades.
- Get help. Biggest service we do for clients is to talk them down from bad decisions. A good adviser will earn their keep in the coaching relationship.
