As a firm of Independent Financial Planners we get a lot of new clients saying they have been disapointed and/or disheartened with previous investments or pensions. This has affected their long term opinion on investment funds, whether they have had their funds in a pension or general investment structure, such as an ISA, PEP or Bond.
However the fact remains that over the last ten years the average returns of all investment funds has grown over 3.5 times more than investing your money in cash. Remember this is the average. With the correct advice many have achieved growth over and above this.
Banks attract our savings to invest and get a better return than they would get by investing in say, another bank. With this in mind, if you could find out were your bank invests your money, would you invest it in a similar manner, or invest it in a way that gives you a lower return? Of course you need to take into account the fact that there is less risk placing your money in a bank, than say investing in a global fund. However the potential return is also relative.
There are many clients that have a positive experience in investing within funds, and have achieved al greater growth than those that have kept money in cash funds over the medium to long term.
There is one common difference between the above categories of clients. The client that has had continuous growth realises that their investments are something that need to be reviewed on an annual basis. They sit down with a financial adviser once a year and discuss their risk profile, current and forecasted economic climates, and then develop a strategy for the next year.
If you are not reviewing your finances on an annual basis with your finanical planner / financial adviser it is probably due to the following reasons:
- You are concerned about your investments, pensions or bank deposit savings and are scared to get bad news.
- You have tried to contact your financial adviser and they have not returned your call.
- You were not aware that is was important to review your financial plan on a regular basis.
- You have no faith in finanical products as the direct debit you signed 15 years ago for £100 per month into a pension has not performed as well as the finanical adviser told you it would have.
If you fall into the above categories, then it is time that you reviewed your finanical policies and investments with an independent financial adviser.
We all aspire to reach a point of finanical independence. The point in our life where we can say “I don’t have to work if I don’t want to”. Some people will be able to achieve this, others will not. However a sound finanical planner should discuss this with you. To be achievable, you must discuss this on an annual basis. An experienced and well qualified financial planner should develop a strategy to get you to the point of financial independence. If this is not an option good finanical planning should get you as close as possible. This type of service will require an annual review.
In the US and Austrialia, people visit their financial planner on an annual basis, just like they will visit their accountant or book keeper. A recent advertisement from the Financial Planning Association of Austrialia, highlighted the fact that developing a strategy to build your money is as important as recording how it is spent.
The fact remains that in order to get the best return from your capital, or build up a sufficient amount of capital, you have to review your savings, investments and pensions on an annual basis. By doing so, you will ensure that you are invested in the correct funds at that time and have a greater opportunity for growth year on year. Do this with a finanical adviser that is transparent and educates you in making the correct decisions.
