This means investing in cash; bank or building society accounts are great for this, but unfortunately keeping money on deposit in the long term means that it is likely to devalue over time. This is inflation risk.
Saving for long term goals and making the money increase in real terms means taking a different sort of risk. Investment risk.
Time in the market: We aim manage the risks clients are exposed to by using your financial plan to show us when the money will be needed. Only when there is sufficient time will we recommend investment in volatile assets.
Our Investment Philosophy: A belief that diversification between asset classes is the most effective way to reduce risk and enhance returns in portfolios. Clients should invest across a range of asset classes that are most appropriate for their individual goals, time horizon and tolerance for risk. As asset classes behave differently from one another, each plays a different role in a portfolio.
Clients can achieve greater expected returns with lower risk in a diversified portfolio. We believe that designing and monitoring such investment portfolios on behalf of our clients involves three very distinct stages: Risk Profiling, Investment Process and Monitoring.
Academic research has provided evidence that an investor's asset allocation decision - the choice of asset classes and the portfolio percentage allocated to each - is the single most important element in a portfolio strategy.
It accounts for 94% of a portfolio's performance compared with 2% for market timing decisions and 4% for security selection. Asset allocation involves diversifying among several asset groups to improve total return whilst reducing risk.
For the majority of client portfolio's we will therefore utilise funds that obtain the return for that asset class. This removes the risk of choosing the wrong fund manager and reduces costs.
The value of investments can go down as well as up you may receive back less than invested.
Past performance is no guide to future returns.