The more risk you take on, the greater the potential reward. All investments come with an element of risk.
When putting together an Isa portfolio, you need to have a clear understanding of your appetite for risk and how much risk you need to take to achieve your investment goals. The best way to do this is through diversifying. Think: eggs and baskets. Make sure that your investment portfolio contains a range of asset classes such as bonds, equities and property, as well as across geographical locations.
A greater allocation of shares will increase the risk profile of your portfolio, while a larger proportion of fixed-interest products, such as government or corporate bonds, will reduce risk. Investors should understand that different categories of shares or equities have different risk profiles.
From Managing Your Investment Portfolio For Dummies - UK, UK Edition The most important thing to you as an investor is your portfolio – the range of assets. Managing Your Investment Portfolio For Dummies - UK, UK Edition The most important thing to you as an investor is your portfolio – the range of asse.
For example, UK and US equities are generally less risky than equities in emerging markets, while small, growing companies are a higher risk than big, established blue-chip firms. Successfully investing for growth means holding the right blend of assets to meet your circumstances, objectives and risk profile. You can reduce these risks by investing into a wide range of shares through investment funds. This will be a sensible approach for most people.
Investing in a fund means that your risk is spread out across various equity classes, industries and geographical regions. In theory, strategic adjustments protect against losses and boost returns. For example, ahead of the Brexit vote, a fund manager might have decreased holdings in small UK companies and increased holdings of long-term government bonds and gold. However, high management charges on active funds will eat into your returns — and there is no guarantee that managers will make the right decisions and the fund will perform well.
This means they tend to be much cheaper than active funds. Over the long term, they should replicate the average growth of the market, minus charges.
They are often a useful starting point for your portfolio. Active funds, meanwhile, take advantage of the expertise of a manager who can focus on specific opportunities with the aim of beating the market. They are therefore a useful way to add potential growth to a diverse portfolio.
But other experts caution that active funds charge too much and deliver too little. Multi-manager funds, in particular, add an extra layer of charges which will eat into investment returns.
Inexperienced investors can opt for a ready-made portfolio, with an investment manager deciding the asset allocation. For example, Best Invest offers four ready-made portfolios: income, defensive, growth and aggressive growth. The price and value of investments and income derived from them can go down as well as up.
You may not get back the amount originally invested. When you want to delegate Investing well is a full time job and sometimes emotions can get in the way.
UBS managed portfolio gives you: A team of investment experts managing your portfolio Ongoing portfolio monitoring so we can react quickly to risks on your behalf Control over your investment strategy at any time Optional access to a specialist to discuss your investments An all-inclusive price. What happens in our first meeting? Prefer to make the decisions yourself — with our advice?
Choose an advised portfolio.