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UNDERSTANDING INVESTMENT OBJECTIVES

Risk appetite, current finances, and future aspirations


Investing is a lifelong journey; the sooner you embark on it, the better your financial future. Whether you're a seasoned investor or a novice, understanding your investment objectives, risk tolerance, and timeline is crucial.


ASSESSING CURRENT FINANCES AND FUTURE GOALS Your choice of savings or investments largely depends on your risk appetite, current finances, and future aspirations. Unlike saving, investing involves a greater potential for both returns and losses. For instance, putting all your savings into high-risk investments may not be wise if you're on the brink of retirement. You might opt for safer options like cash accounts or bonds that protect most of your money while allocating a small portion to growth-focused shares. On the other hand, if you're a young professional just starting to save, you might be comfortable investing a larger sum in higher-risk investments with higher potential returns, knowing you won't need immediate access to these funds.


"INVESTING IS A LIFELONG JOURNEY; THE SOONER YOU EMBARK ON IT, THE BETTER YOUR FINANCIAL FUTURE."

CONSIDERING CASH OR TERM DEPOSITS If you plan to put down a deposit on your first home soon, consider cash or term deposits. These can keep your savings safe in the short term.


DIVERSIFYING INVESTMENTS TO PROTECT WEALTH A diverse portfolio can help safeguard your wealth from market volatility. There are four principal types of investments or 'asset classes', each with its own benefits and risks.


DEFENSIVE INVESTMENTS Defensive investments aim to generate regular income rather than grow over time. The two most common types of defensive investments are cash and fixed interest.

CASH INVESTMENTS Cash investments, such as high-interest savings accounts, provide stable, regular income through interest payments. Although they carry the least risk, the value of your cash could decrease over time due to inflation.


FIXED-INTEREST INVESTMENTS Fixed-interest investments include term deposits, government bonds, and corporate bonds. Term deposits lock up your money for a specific term, earning you interest at a rate similar to or slightly higher than a cash account. Bonds are loans to governments or companies that pay a regular interest rate over a fixed period. Despite being considered low-risk, certain types of bonds can decrease in value over time.


GROWTH INVESTMENTS Growth investments, including shares and property, aim to increase value over time and potentially pay out income. However, these investments come with higher risks.


SHARES Shares represent ownership in a company. They are considered growth investments because their value can rise, and you can make money by selling shares at a higher price than you initially paid. Additionally, if you own shares, you may receive income from dividends - a portion of a company’s profit paid to shareholders.


PROPERTY Just like shares, the value of a property may rise, and you can profit by selling a property for more than you paid for it. However, property prices are not guaranteed to rise, and properties can be harder to sell quickly than other investment types. Your home may be repossessed if you do not keep up repayments on your mortgage.


UNDERSTANDING RETURNS Returns are the profits you earn from your investments. Depending on your investments, returns can be paid in several ways: n Dividends (from shares) n Rent (from properties) n Interest (from cash deposits and fixed interest securities) n Capital gains or losses (the difference between the price you pay and the price you sell for)


POTENTIAL FOR YOUR MONEY TO GROW Investing is a crucial component of financial planning. By understanding your current financial situation, defining your future goals, and understanding the different investment options, you can make informed decisions that align with your financial objectives and risk tolerance. Remember, investing is a long-term journey; the earlier you start, the more potential for your money to grow.


THIS GUIDE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE. A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE). THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

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