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27 Mar 2019

Finding the investment that feels right for you

Considering investing? Here are some punchy pointers on what you might want to think about in the early stages.

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There are myriad ways to invest. We spoke to Coutts wealth manager Hannah Buxton about the thought process when you first set out.

Q) What’s the first thing you should think about when investing?

“Think about what’s really important to you. What do you want to achieve with your investment? Who will be the ultimate beneficiary of it? You? Your family? A cause you care about?

“Then, think about how much return you’ll need to meet those goals.

“Once you’ve done that, you can start to consider what level of risk you’d need to take and whether that feels right.

“It’s also worth considering how soon you want to get any money you make on your investment back. In our view, the best way to get the most out of investing is to do it over the longer term. Markets rise and fall from one day to the next, and there’s always risk to be aware of, but as the years pass economies tend to keep growing.”

 

Q) How should people think about risk? Should they avoid it as much as possible?

“It’s important to remember that all investment comes with an element of risk. Even if you put your money in the bank, you run the risk of inflation eating away at its long-term buying power.

“But risk is not necessarily a bad thing. It’s an integral part of investing. The greater the risk you take, the greater the potential reward – although it’s always worth remembering you might not get back what you put in.

“The key thing is to understand how much risk you’re willing to take for a potentially larger return – and how much loss you could potentially afford. Balancing your need for a high return with your capacity to cope with the ups and downs of investment markets will help you find your place on the risk spectrum.

“At Coutts, our various portfolios and funds cater for a wide variety of different risk levels. For example, our five Personal Portfolio Funds range from a lower-risk option weighted towards bonds, to a higher-risk fund filled with equities.”

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“Think about what’s really important to you. What do you want to achieve with your investment? Who will be the ultimate beneficiary of it?”
Hannah Buxton, Coutts wealth manager

Q) What else should people think about?

“Once we’ve sorted the overall goal and level of risk, we talk to our clients about whether or not they want to pay for a portfolio manager – someone who really knows the ins and outs of financial markets who they can talk to on a regular basis.

“Just as important is how much they want their portfolio to be tailored to their specific needs. Are there any areas they simply won’t invest in for ethical reasons? Are there certain markets they want to over-play or under-play depending on their wider circumstances? For example, if they’ve already invested in a lot of property, they may not need us to invest in it on their behalf.

“Once that’s all thought through, it’s time to talk about the more technical aspects of how the investment is structured – the channels through which they invest. It could involve using an ISA, a pension or an offshore bond, for example. There are a variety of different ways to set up a portfolio and each one has its own implications. A big part of what we do is to walk our clients through that.”

 

Q) What options are available when it comes to managing your own investment?

“You can have pretty much anything, from no contact with your investment house at all, to constant involvement in your portfolio. But the greater the contact, and the greater the tailoring, the greater the cost.

“At Coutts we have investment products for those who want to be closely involved in every decision made. Those clients work closely with an investment manager here to shape a portfolio precisely tailored to their needs.

“But we also have products which involve buying an ‘off-the-shelf’ portfolio or multi-asset fund that is managed day-to-day by a team of experts who pick investments based on their knowledge of individual companies and sectors.

“And then there’s our online option, where you spend a few minutes setting up your investment and check on progress whenever you want, but have no involvement beyond that. Our investment managers decide on the broad asset classes or countries to invest in, but they don’t spend time searching for individual investments, and the charges involved are therefore lower.”

 

Find out more about investing at Coutts. And if you’re a Coutts client who would like to discuss our investment options in more detail, please speak to your private banker.

There are other types of investments you may want to consider as well – private equity, property and passion assets for example.

 

Important information

When investing, past performance should not be taken as a guide to future performance. The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.

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Key Takeaways

When looking to set up an investment, it’s worth considering:

 

  • what you want to achieve with any money you make
  • how much return you think you’d need to meet those goals
  • the level of risk you are prepared to take
  • how much contact you want with an investment manager
  • how much you want your portfolio tailored to you

 

At Coutts, we have a range of different investment approaches to meet varying needs. Our experts are on hand to work with you to help find the one that feels right for you.

About Coutts Investments

With unstinting focus on client objectives and capital preservation, Coutts Investments provide high-touch investment expertise that centres on diversified solutions and a service-led approach to portfolio management. Our investment process is as disciplined as it is creative – ensuring tailored solutions with robust results.

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