Its November, New Years’ resolutions have fallen by the wayside, and 2016 hasn’t exactly made it easy to save more and invest. Interest rates are at record lows, inflation on the up, the oil price has been volatile, Chinese growth expectations revised down, Brexit, Trump, these are just a few of the headlines that have triggered tremors throughout the financial markets.
When the financial markets are tough and interest rates on savings accounts low, investors need to remain focussed to ensure they get their money to work as hard as possible. Here are three ways to get the best from your investments.
1. Set clear goals
What are you hoping to achieve by investing, and what is the time horizon of that investment? A clear target and a timescale are the things that will help you to figure out how much you should be investing each month, and how much risk you can take.
Setting and checking in with clear goals is the best way to ensure your investment is working. If you’re likely to need money to reach that goal within the next year or so, you’ll want to limit the risk in your portfolio to reduce the likelihood of the value falling. But if your goal is further off, it could be worth considering taking higher risk to have the opportunity of higher returns.
2. Focus on cost
You should review your investments to ensure they’re worth keeping. Cost is one of the most important elements of investing that you have true control over; by keeping costs to a minimum you’re able to maximise the impact of any returns.
3. Check the balance of your portfolio
Risk and return needs to be monitored carefully when you invest. Over time some investments are likely to perform better than others and this will change the shape of your portfolio. You could become overly weighted in a particular asset class, or be exposed to too much risk in another. Reviewing your portfolio and rebalancing when required allows you to realise the profits from a successful investment and reallocate it to another area, whilst maintaining a level of risk that is suited to your goals.
