In order to get the best out of the money you invest, you need to use insight when choosing your preferred vehicles and assets. Insight involves many complex issues to be considered, and if you’re not an investment expert, you might need professional advice on choosing the most suitable, insightful investments. If you do, help is at hand. The team here at Moneyfarm has your back.
Even investments made with insight need strategizing
Even the most carefully considered investment plans can go wrong. Take the stock market and share investing as an example. It’s notorious for its volatility. Even the strongest shares are at the mercy of supply and demand and the world economy, factoring risk into the equation.
Risk analysis is something that is usually associated with the workplace; the processes and materials used therein. But it can also be employed in the investment industry not only to identify, but also analyse risks, and to create and deploy solutions that can be used in mitigation.
The power of diversification
Unless the global economy takes a turn for the worse, while certain stocks and shares will lose value through demand and local economics, others will increase in value. Making sure that your insightful investments are made across various companies operating in different industries, and you use different vehicles such as ETFs and stocks and shares ISAs, is the first mitigator.
The versatility of long-term Investing
Relying on short-term investing can be dangerous unless you really know what you’re doing. If the stock or property markets collapse or suffer a serious drop just when you have to encash your investments, you could lose a lot or even all of your money. Therefore it’s usually recommended you invest long term. However, you never know when emergencies or unexpected situations will crop up, so it is always a good idea to have some short term investments too; investments you can access quickly when needs must.
If you get your financial planning right, making Insightful investments that cover both your short and long term goals, you will be successfully utilising mitigation factor 2.
Reevaluating the allocation of assets
The global stock market is like a living, breathing, thing. It’s constantly changing and unless you review your asset allocation from time to time, your portfolio could start leaning the wrong way, both in terms of value, and risk. If, for example, you think your portfolio is erring towards too much risk, you might decide to purchase some, or more bonds.
Some experienced portfolio managers use something called stock ‘Beta’. It’s a measure of the relationship between a stock and the stock market. As an example, as Beta 1 measurement refers to stocks that will react in tandem with say, the S&P 500. If the Beta is under 1, the stock is less volatile than the market in general.
No investment can ever be considered 100% safe, and many investors believe bonds to be a way of hedging against inflation and can be used for outstripping lower risk assets, while helping to steady the ship on the higher risk front. Bonds can also be used to fund a steady, reliable source of income.
Portfolio balancing
Having identified that what you previously considered insightful investments have now become a little too risky for comfort, or are underperforming, you can, if you have the skill and knowledge, change things about yourself.
One of the problems when you use the DIY approach is that it might feel counterintuitive as it might mean abandoning investments that have appreciated in value (the ones you’ve had fun watching), and buying investments that might be declining in value. It is, however, an example of insightful investing in action. If you feel uncertain, you can use the services of a professional portfolio manager to rebalance your portfolio.
Insight investment management is about using all of the components discussed above to ensure that your portfolios remain on target to achieve your investment goals, including that of securing a good income in your retirement.
Using insightful investments to achieve long-term growth
Using insight when investing is a proven way of optimising portfolio growth. Insightul investments are geared towards long term growth with the help of insightful management. One of the best financial vehicles you can use to hold, monitor and manage your investments is a Moneyfarm general investment account, or GIA for short.
The beauty with this GIA is that you can appoint the experts, (say Moneyfarm for example), to manage your GIA for you, creating a portfolio that mirrors your financial needs and goals. Alternatively, you can manage it yourself.
Moneyfarm has recently introduced two new investment options both of which can be described as being insightful. They are thematic investing and liquidity.
Thematic Investing
As well as understanding and taking the complex issues of investing into account, the word ‘insightful’ also suggests looking into the future and potential high growth markets. That is exactly what Monkeyfarm’s thematic investing initiative is all about. Operating around the principles of ESG investing, thematic investing works by promoting four major themes which are then subdivided. They look like this:
| Principle Theme | Theme sub-components |
| Technology | Artificial intelligence, clean energy, E-commerce, electric vehicles, and semiconductors. |
| Sustainability | Clean water, the blue economy, circular economy, and clean energy. |
| Society | E-commerce, e-sports, global equality, and global infrastructure. |
| Multi-trend | E-commerce, global infrastructure and semiconductors. |
By using these growth themes, you can align your investments with your personal priorities and values.
Liquidity+
Moneyfarm has also introduced Liquidity+. It is aimed at the shorter-term investment side of things which, as discussed earlier, is an essential element when considering insightful investments. Tying all of your funds up long-term is all very well, but as we all know, the future is unpredictable.
With a time horizon of 2-years, liquidity+ will provide you with a 5% gross annualised yield, but you can, if necessary, exit or transfer the funds to other vehicles beforehand without penalty.
Both of these new accounts can be considered invaluable options when you adopt an insightful investment strategy.
Which is better – insightful or traditional asset management?
Some people talk about ‘insightful investments’ as if they were a specific type of investment. They are not. What is generally meant when investors use this term is not a particular type of investing, but a particular approach and style. It’s used as a verb rather than a noun.
Traditional asset management is more reactive, whereas insightful investing is more proactive. The traditional approach is dictated by what is happening in the now, as opposed to the insightful approach, which can ignore what is happening in the now to some extent, because it’s focussed on the future. While both types of investing are to be commended, insightful investments win overall because of the long-term focus.
How to start making investments with insight
Getting started using insight to create an investment portfolio is no easy thing. As we said at the outset, the world of investing is a complex one, it’s why when starting out, many investors choose one of the seven portfolios that Moneyfarm offers. Each one has been created with insight and has been risk assessed. The assets contained in each of the seven have been chosen with care to accommodate different levels of client risk tolerance, with option one being the lowest, and seven being the highest.
The table below shows how each portfolio has performed over the last 8 years. Previous performance history does no guarantee of future performance, but nonetheless, a case study like this is a useful indicator.
| Portfolio number | Average annual percentage increase From 2016 to 2024 |
| 1 | 0.3% |
| 2 | 2.2% |
| 3 | 4.2% |
| 4 | 5.3% |
| 5 | 6.3% |
| 6 | 7.4% |
| 7 | 8.9% |
Using data on the inflationtool.com website.
The table indicates that when you opt for lower risk investments, the returns are lower, even with insightful investments. It’s the old risk versus reward scenario. As risk tolerance increases, the returns become significantly higher.
The benefits of Insightful Investing
Moneyfarm’s investment portfolios work with compound interest. It means that it’s the increased value of the portfolio after the year’s return has been added that is carried forward, on which the next year’s interest is then applied, year on year. Fund growth is in effect exponential. In addition to the returns made through insightful investments, you also have the satisfaction of knowing that your portfolio includes ESG investments and future-centric environmentally friendly thematic investments too.
*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.
