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Introduction
Investment management is the professional asset management of various securities (shares, bonds and other securities) and other assets (e.g. property) in order to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations, charities, educational establishments etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds or exchange-traded funds).
Things to consider
– A predictable and reliable stream of income: Consider strategies that aim to deliver a steady income in the form of coupons from quality bonds, dividends from shares or distributions from Real Estate Investment Trusts (REITs) and infrastructure.
– Smoother returns: Focus on strategies that are designed to exhibit lower volatility than the broader market.
– Inflation protection: It’s important that the overall portfolio seeks to grow with the cost of living to maintain purchasing power of income over time.
– Tax effectiveness: Strategies can be adopted to minimise Tax in most locations, successful implementation will ensure more money stays in your pocket.
– Liquidity: It is easier to redeem money from liquid investments when a change in circumstances may require it.
– Transparency of strategy: Seek strategies that are easy to understand and where the manager offers regular communications and insight into how funds are performing against client goals.
Summary
The key to knowing which investment solutions are most appropriate is to understand what success and failure looks like. That is, what is your investment required to do for you at this particular point, and how might that evolve over time? What constitutes a ‘must have’; what is ‘nice to have’ and what is ‘aspirational’? These are important questions whose answers enable investment strategies to be better matched to your individual goals. If using an adviser, by identifying what truly constitutes success and failure will likely lead to enjoy a successful long-term relationship.
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