Should I be taking more or less risk with my portfolio right now?

Category: Investment

Market conditions change all the time.

Investors may wonder if they should change the composition of their portfolios to reflect this.

How could I change the level of risk my portfolio takes?

The portfolios we build for our clients align to ten risk profiles. These range from investing purely in cash to more speculative investments in developing economies. The easiest way for one of our clients to change the risk they are taking is to move into a portfolio aligned to a different risk level.

When should I look at changing the level of risk my portfolio takes?

We believe our clients should be taking as much risk as they can with their portfolios. The only limit should be how suitable taking risk will be for each client. This will reflect the client’s willingness to take investment risk, their circumstances, and their goals. Where the plan dictates, we may recommend a change to the portfolio. Reasons for this could be their goals approaching or changing.

As we strongly believe that no one can predict the future consistently we would not encourage opinions about future market performance to be a major factor in deciding how much risk to take.

Most of our clients will invest for decades and there will be numerous things which could cause us to worry along the way. I would venture most cannot remember what they worried about five years ago let alone in previous decades. We cannot consistently predict or time the economy, the markets, or the future. There is one way to fully capture the potential long-term return of the investment markets across the world. This is being able to ride out the ups and downs of those markets along the way. This is what we focus on helping our clients with rather than attempting to analyse current events or perceived threats.

A robustly constructed portfolio is a feature of a financial plan. The relationships we have with our clients only have meaning and value through their financial plans. Your portfolio should be never anything more than a function of your wider plan.

If you want to have a chat about this, feel free to book in a free no-obligation chat here or get in touch.

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