Reflecting on the past 6 months, particularly since the effect of Coronavirus on financial markets, I am concerned that many investors do not have a clear and tailored investment strategy. My observations are that investors seem to be failing to understand one basic investment principle; 'The higher the return the higher the risk’.
In many instances there remains a significant misalignment between the investor’s risk profiles and the investment risk connected with their investment portfolio.
The next 12 to 24 months will experience further challenges and headwind in investment markets, with investors seemingly not factoring in the risk of recession and downturn in markets.
Investors are investing without a strategy or plan that is reflective of their goals and objectives and their personal financial circumstances. Instead, investors are focused on maximizing returns and the index benchmark. In a low investment yield environment, investors are focused on higher returns without considering the associated risk.
Therefore, investors may be taking on more risk than is necessary to achieve their desired outcome.
Our Investment Philosophy centres on:
Risk simply means the probability of a negative outcome occurring.
When addressing an investor’s risk profile, two factors are relevant:
If you are concerned that you haven’t considered inherited investment risks in light of your personal risk profile or need assistance in
compiling a relevant and considered investment strategy, please get in touch.
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