As with all investing, your capital is at risk. The value of your portfolio with Moneyfarm can go down as well as up and you may get back less than you invest. Tax treatment depends on your individual circumstances and may be subject to change in the future. If you are unsure investing is the right choice for you, please seek financial advice.
In the first of our new financial mini-series we explained how best to approach your first meeting with a consultant. In it, we discussed the different time horizons and which could be suitable for your investment needs.
Now, we’ll go on to explain which Moneyfarm solutions may be best suited to your chosen investment horizon.
After your first meeting with a consultant and clarifying which financial planning goals to prioritise with their guidance, you’ll be presented with different solutions based on your investor profile. The independent advisory team at Moneyfarm will then propose the most suitable products for your unique saving and investment goals.
Let’s delve deeper into the range of Moneyfarm offerings suitable to varying time horizons.
Short-term horizon: 0-2 years
If your investment horizon is relatively short, the priority will be to find the right balance between the liquidity you need to keep in your current account for ordinary expenses and an extra cushion set aside to deal with any unexpected life events.
Liquidity+
Liquidity+ is specifically designed for a time horizon of less than two years, and you can still choose to exit or move the investment to another portfolio at any time.
This solution reduces exposure to volatility because it invests in a portfolio of institutional-class money market funds selected by our Asset Allocation team. These mutual funds invest in low-risk short-term debt securities, such as government securities, commercial paper, and certificates of deposit.
Medium-term horizon: 3-5 years
When an investor’s intention is to stay invested for a few years, the adviser may consider a multi-asset approach, which involves exposure to a basket of asset classes such as stocks, bonds, commodities, etc. This is a well-diversified investment strategy where you can see more mixed performances across asset classes and, depending on the choice of the portfolio – which should consider the time available and the individual investment profile – with a careful eye on the maximum risk assumed. Diversification allows for controlling the expected volatility of an investment, increasing or decreasing the percentage of riskier assets.
Moneyfarm Multi-Asset Portfolio
With a Moneyfarm Multi-Asset portfolio, our Asset Allocation team constructs diversified multi-asset portfolios. We offer seven lines of flexible and balanced management, with a substantial proportion of bond investments and exposure to equities increasing with the level of portfolio risk selected. In simpler terms, for an investment time horizon of 3 to 5 years, the most suitable Moneyfarm strategy could be a portfolio comprised of both equities and bonds, with a greater equity weighting, which would mitigate potential risk in equities through a fixed-income component. As these asset classes tend to be conversely correlated – whereby one should expect to go up while the other would be expected to go down – it is, we believe, a more effective way to balance risk in a portfolio.
Moneyfarm Share Investing
Depending on the funds available and a client’s financial literacy, they may also consider complementing a managed portfolio with a percentage of capital allocated to a Share eInvesting account.
Moneyfarm Share Investing allows for totally independent trading in the markets, where you can choose from a range of ETFs, stocks and bonds through our platform. With a Fixed Allocation portfolio, you can take a more holistic view of your investments. Thanks to our new Analytics, you can monitor the level of risk and the geographical and sectoral exposure of all you investments at any time, both in managed and Share Investing accounts.
Medium to long-term horizon: 5-10 years
With this time horizon, an adviser could help the client accept higher risk and additional liquidity constraints to achieve a more significant return closer to stock market performance.
Moneyfarm Multi-Asset Portfolio
If you have a medium-to-long-term horizon, you may consider allocating a greater percentage of your portfolio to equities, potentially giving yourself greater potential upside balanced by more potential risk.
Moneyfarm Share Investing
If you want to invest independently, then you can discover a range of stocks, ETFs, bonds and mutual funds through Moneyfarm Share Investing.
Plus, our Share Investing collections now allow you to invest in assets grouped by sector, geography or theme, all designed, managed and monitored by the Asset Allocation team. These investments can be made totally independently, so you can add to any of these themes to your portfolio.
The team-curated collections currently available include: Stable Income, High Yield Dividend, Artificial Intelligence, UK Yields Below Par and Geopolitical Trends.
The Moneyfarm Asset Allocation team curates each of our Collections, ensuring every one offers its own unique benefits. Whether you’re seeking growth, stability, or tax efficiency, Moneyfarm’s Collections provides a tailored approach to enhancing your portfolio.
- AI Innovators: Gain exposure to companies at the forefront of Artificial Intelligence and machine learning, driving the future of technology and innovation.
- Thematic Geopolitics: The “Geopolitical Trends” Collection provides targeted exposure to sectors pivotal in today’s geopolitical landscape.
- High Yield Dividend: Focus on ETFs that track stocks with a history of paying above-average dividends, aiming to generate regular income and potential capital appreciation.
You can find out more about our curated collections and share investing service on our dedicated page here, or you can talk through the options with one of our dedicated advisers who’ll be happy to help.
Very long horizon: more than 10 years
For an investor with a long time horizon, an adviser may advise a more aggressive savings strategy with a higher risk/return profile, although that shouldn’t be seen as an inducement to invest speculatively.
Moneyfarm Multi-Asset Portfolio
A potential portfolio for an investor with a good level of risk tolerance, who is aiming to build their capital over a long-term horizon, could be Moneyfarm portfolio 7.
Like all Moneyfarm portfolios, portfolio 7 is built to generate returns over time within controlled risk horizons. It provides mainly equity exposure, which can vary between 75% and 90%, depending on the tactical positioning agreed by the Moneyfarm Investment Committee, with a volatility target of around 14%. Other asset classes, such as bonds and commodities, are then added to complete the portfolio.
Diversification remains fundamental to reducing the risk linked to individual economic sectors in equity investment.
In fact, you can choose to invest in socio-economic megatrends that bring together the themes that are shaping our economy and the future of our world, aiming for greater expected returns over time. Such themes include Sustainable Investing, which focuses on sectors like the blue and circular economies; Companies of the Future, focused on sectors including E-commerce and global infrastructure; and Technological Innovation, to invest in semiconductors, battery technology and Artificial Intelligence companies.
Moneyfarm Share Investing
Moneyfarm Share Investing is primarily designed for long-term investment objectives. It allows investors to invest in a selection of shares, ETFs, bonds and mutual funds. Our selection covers a wide variety of equity and fixed-income assets, including ESG investments, climate, and various other thematic ETFs.
Pensions
When designing a pension plan, an adviser will aim to manage risk consistently with the investment’s life cycle. The objective is to fill the investor’s pension gap, i.e., the difference between their last salary and their first pension payment.
Moneyfarm Pensions
A Moneyfarm Pension is a Self Invested Pension Plan (SIPP). We design all our pensions to be as flexible and fiscally advantageous as possible. For our pension plans, we offer six diversified investment lines to manage risk consistently over the investment’s life cycle.
All these investment lines comply with sustainability criteria, i.e. environmental, social and governance (ESG), thus falling within the classification in Article 8 of the SDR, the European Regulation on Sustainable Finance.
Our asset allocation team designs and constantly monitors each portfolio, which are built-in ETFs to optimise asset allocation and minimise costs. This allows you to take on increasing exposure to stock markets.
If you have a limited company, you may be able to offset any corporation tax due on your contributions through your limited company.
All pension instruments also offer various tax advantages, including exemption from stamp duty.
To learn more about Moneyfarm Pensions or any of our savings and investment products, you can book an appointment with a consultant online here or you can get in touch with a member of our team via phone or email at any time and we’ll be happy to help guide you on your investment journey.
*As with all investing, financial instruments involve inherent risks, including loss of capital, market fluctuations and liquidity risk. Past performance is no guarantee of future results. It is important to consider your risk tolerance and investment objectives before proceeding.
