Thinking of investing

Are you investing for your retirement or your children’s future or do you just want to build an investment portfolio?

Do you want to receive:

• capital growth i.e. the fund to grow in value over time or
• a regular income, or
• both

Every investment has an element of risk but you need to be comfortable with the amount of risk you are taking on. Start by asking yourself the following questions:

1. Can you afford to lose money? How much can you afford to lose – what will happen if you lose all or some of your money after investing? The answer will depend on your personal circumstances, for example, you may be relying on your investment for your retirement or to pay for your children to go to college.
2. What is your attitude to risk? Nobody is happy with the idea of losing money, but we might also regret being too careful with long-term investments if we don’t get the returns we need or expect. Your risk attitude is the level of risk that you are comfortable taking. This can be influenced by lots of factors including your personality, your past experiences investing money and experience of financial education. Your attitude to risk is sometimes called your risk appetite.

When you meet with a financial adviser, they should assess your attitude to risk and the importance of capital security to you. You should only be offered investment products in line with your risk profile.

A question you may be asked in order to assess your attitude towards risk could be: What is your investment objective?

• To make high returns, regardless of risk?
• To make high returns, without too much risk to your capital?
• To make good returns, with little risk to your capital?
• To make returns which beat inflation, without significant risk to your capital?
• To protect your capital?

Generally, the longer you invest for, the greater the potential to earn a higher return. However, you need to consider if you will need access to the money during the term and how quickly you would be able to access your money if needed.

You can check this by typing in their name here.

If the financial adviser or investment firm is not regulated and things go wrong, you are unlikely to have access to public complaints procedures and compensation schemes. Also, the Financial Services and Pensions Ombudsman cannot investigate complaints against an unauthorised investment firm or financial adviser.

When dealing with a regulated firm, you should also check if the product you are considering is regulated. Unregulated investment products (e.g. cryptocurrencies and property) can be sold by regulated entities but these products will not be covered by complaints procedures and compensation schemes, however you may be able to access the services of the Financial Services and Pensions Ombudsman.

Sustainable and ethical investment is a way of investing your money in companies which place a higher importance on Environmental, Social and Governance (ESG) issues when running their business. You should discuss this with your financial adviser or investment company at the outset to make sure they are aware of your preference. You should also consider what kind of issues are important to you and check that these issues are clearly reported on by any investment product you are choosing because it is ethical or sustainable.

Taxes and charges can significantly reduce the value of your investment. Before you invest, you should be provided with a list of the taxes and charges you will be liable to pay. Make sure to check if the charges are a once off or if you will have to pay them on an ongoing basis.