Your trademark style makes you who you are.
When we get dressed each morning the clothes we select represent how we feel. We show our personality through our sense of fashion.
We are all individuals and there isn’t a one-size-fits-all.
The same approach should be applied to your wealth management. The way you manage your money and set up your investments should represent your:
Your investments should represent your style completely. If it doesn’t, then you need to take action.
6 ways you can STYLE your investment
1) Direct vs Indirect Investment
Do you want to buy the stocks and shares for your portfolio yourself or do you prefer to delegate this?
Most investors when they start out will delegate and invest via a managed fund.
A managed fund means that an expert is picking the investments and managing the portfolio on your behalf. Even if you don’t have much money, you can access the global stock market. It is often less risky than buying individual shares due to a mix of investments (although the overall value can still fall and you could get back less than you invest). The drawbacks are that there is the extra cost of the fund manager and returns may be lower than direct investment.
2) Income vs Growth
Consider whether you want to invest for growth, for an income, or a bit of both.
This choice impacts the type of investments you buy. If you’re investing for income you might want to buy shares in a company that pays a dividend or bonds that pay a known fixed income.
When you invest in a fund, usually the fund manager will offer an income class or an accumulation share class. The income class will pay out all the income it receives, whereas the accumulation class will automatically reinvest any income it receives on your behalf. This means you can easily select the type of fund class you want depending on whether you need an income or not.
3) Single mandate fund vs multi-asset funds
A single-mandate fund - contains a portfolio of a single type of investment, for example, a portfolio of UK shares.
A multi-asset fund – has greater diversification than a single mandate fund because it isn’t limited to a single type of investment. It can invest in bonds, cash, property, and shares.
4) Active vs Passive Fund Management
When you select a fund, you have a choice of whether you want your money to be actively managed or whether you want to track the market passively.
An active fund manager is trying to outperform the market by aiming to pick the best investments from the market hence giving you the chance to outperform the market. Typically, there is a higher cost than passive and the fund manager may underperform the market.
A passive fund will track a set market index. For example, if you are tracking the UK market you might pick a fund linked to the well-known FTSE 100 Index (Footsie). Because a passive fund doesn’t care about choosing the best investments to buy, it is simply replicating an index, there is typically a lower cost than active management. However, due to the fee, your passive fund will always be expected to slightly underperform the market.
You can have a combination of active and passive, where an active manager will pick the best mix of passive funds as part of a multi-asset strategy.
5) ESG investing
ESG refers to environmental, social, and governance practices of investment firms.
Such factors are considered to have a material impact on the performance of a particular investment. This means an ESG rating enhances traditional financial analysis by identifying potential risks and opportunities beyond technical valuations. While there is an overlay of social consciousness, the main objective of ESG is to boost financial performance.
6) SRI investing
SRI stands for Socially Responsible Investing, going one step further than ESG by actively eliminating or selecting investments according to specific ethical guidelines.
SRI uses ESG factors to apply negative or positive screens on the investment universe.
Positive screening: companies with a conscience, such as wind, solar or sustainable production.
Negative screening: companies that sell alcohol, tobacco, and other addictive substances, gambling, production of weapons or environmental damage
7) Risk rating
Depending on how much return you seek, and how much risk you are prepared to take, you need to consider the risk rating of the fund you pick.
Every fund that can be marketed to a retail investor has to have a Key Investor Information Document, a KIID in the UK. In this document, there is a handy scale to show you how risky the fund is on a scale of 1 to 7, with 7 being the highest risk level. This enables you to compare funds and choose what is right for you.
You can style your investment by simply working out what you want and what type of investment will best meet your needs.
Styling your investment is what I teach in my wealth management course. Learning how to style your money is incredibly empowering.
How to get in touch
If you would like to learn more about investing, as a financial coach, I can help you to understand more about your money and help you to invest with confidence.
Email me at email@example.com to arrange a discovery call.
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