Pension Planning Part 2
How to get the most from your hard-earned cash – 6 investment principles
No matter what plans you have for the future or what stage of life you may have reached, it is important to ensure your money is growing at the best possible return without taking undue risk. Hence, it is vital that you strategize an investment approach that is the right fit for you and that meets your goals.
Have a plan and stick to it
Whatever your goals are in life, if you implement careful planning and successful investing you will be able to achieve a successful outcome. Establishing your investment objectives is the basis of any financial plan, helping you work towards your overall goals. It is one thing to have a target, but a sound financial plan can make the difference between simply hoping for the best and achieving your investment goals. Any good plan should always be reviewed to ensure the results are staying true to the overall goals whilst avoiding becoming distracted by short-term market uncertainty.
Cash isn’t always king
Keeping your money in cash can be a temptation, perceived as a as a safe and secure option – but inflation is
likely to erode your savings. People who have longer-term investment plans, should supplement cash with investment in diversified asset classes which help to beat inflation and offer improved capital growth potential. Any investor who has a long-term time horizon should never ignore the effect of wealth reduction experienced through the long-term effect of inflation. Different asset classes provide varying degrees of protection against inflation.
Diversify and always consider your investments as a whole
If we had the benefit of being able know the future performance of asset classes, there would be no need to diversify our investments. Investing would be as simple as choosing a date when we needed our money back and then selecting the investment that would provide the highest return to that date. Because we do not have the privilege of 20:20 foresight, it is important to manage investment risk and improve your probability of success. By holing a variety of investments. You can diversify your portfolio across different asset classes, geographical markets, and industries. Such diversification, if done properly, should give you a robust portfolio which can give you good upside whilst being resilient in times of market fall.
Start investing early if you can
The best way to build wealth is simply by starting early. Don’t just wait until you have a large pot of savings, investing with smaller amounts for a longer period is more effective than waiting until you have a large amount of savings to invest. This is thanks to the power of compounding – the effect where the money you earn generates exponential growth over time. Essentially, you grow both the principal amount you invested, and any accumulated interest, dividends, and capital gains. The longer you are invested, the more time there is for
your investment returns to compound.
Don’t abandon your plans
‘Activity bias’: the urge to ‘just do something’ in a crisis, whether the action will be helpful or not is one of the main pitfalls to retail investors that act without professional advice. It can be tempting to abandon your plans when investments are falling in value and sell them. However, this can be detrimental because you won’t be able to benefit from any subsequent recovery in asset prices. Markets are typically cyclical in nature and it’s important to accept that there will be good and bad years. Long term market trends smooth over any short-term dips, increasing the potential for healthy returns
Tailored investment advice
Investor’s needs are different and, although the points above are good general tips, there’s no substitute for an investment approach that’s tailored specifically for you. Once we know an investor’s risk tolerance and their investment goals, we can put in place a global portfolio of equities, fixed income, cash, and, when appropriate, alternative investments. The goal is to invest with a long-term view and maximize after-tax returns. It may just be the best investment you ever make.
Before you make any decision conduct good and thorough due diligence.
Only speak with qualified and regulated Pension suppliers.
Ask to speak to their clients get firsthand feedback from their customers.
The Pension market can be a minefield so be careful and choose wisely.
If you have any questions about Pensions, we are more than happy to pass you onto our specialist of choice.
Call us on +66956583038 What’s App or Line or email us info@lawyersforexpatsthailand.com