Investment Philosophy - I am a Believer!

news Nov 23, 2017

Investment Philosophy
I am a believer!
Planning for your financial future will give you peace of mind today. This week, our Expert
Qualified Financial Advisor, Eoin Liston, Premier Financial Services, discusses why having an Investment Philosophy that you believe in is so important.

The world of investment is complex and uncertain and it is an Adviser’s role to help investors navigate a safe path through this to achieve their financial goals.
Any investment portfolio is constructed of a number of elements that contribute to the overall risk and return of the investment. These elements include Company shares that give access to businesses profits, Bonds which are loans to both companies and governments for which you receive interest, property, cash, and alternative investments which are overseen by skilled investment managers.
An Adviser combines different assets to create your Investment Portfolio which drives both the return you are targeting from you investment and also seeks to minimise the risk of losing money over time.

Some Principles of Investing

1. Investment for the Long Term: Take a long term perspective of over 5 years to harness the power of compounding and to allow for inevitable short term fluctuations in value
2. Diversify your investments: Get a good spread of assets and exposures to avoid any single investment taking you down. “Diversification is the only free lunch in investing” and it is vital not to take risk unless you are rewarded for it.
3. Don’t overpay for returns: In modern efficient markets it is extremely difficult to outperform the market as a whole. Evidence suggests that less than 10% of active managers out-perform their benchmarks over 10 years. Our portfolios capture returns largely through passive investments that offer the best value for money
4. Review your investments regularly: Ongoing monitoring and review is vital to secure returns. You portfolio needs to be re-balanced periodically to make sure it has the correct level of risk and expected return. Also it is important to review the overall approach on a regular basis to ensure that it remains fit for purpose.
5. Stick with your Plan

Why do you need an investment philosophy?

If you do not have an investment philosophy, you will find yourself doing the following:

1. Lacking a rudder or a core set of beliefs, you will find yourself probably reading the latest financial news regularly trying to find the magic strategy that beats the market.

2. Switching from strategy to strategy, you will have to change your portfolio, resulting in high transactions costs and paying more in taxes.

3. Using a strategy that may not be appropriate for you, given your objectives, risk aversion and personal characteristics.

The Content of this column is generic in nature and is not meant to provide individual investment advice to the reader.
Before an investor considers any investment they should seek independent professional investment advice suitable for their own personal circumstances.

Premier Financial Services is a registered trade name of PCS Financial Services (Kerry) Ltd.PCS Financial Services (Kerry) Ltd. T/A Premier Financial Services is regulated by the Central Bank of Ireland

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