Investment Planning

Your understanding of the risks involved in investing

It is important that when making decisions in relation to your financial planning that you are aware of and fully understand the potential risks involved e.g.

  • Capital risk – not getting back as much of your money as you originally invested / losing some of the return already achieved.
  • Income risk – where you are investing for income, the risk that the income level achieved is less than you had expected.
  • Liquidity risk – not being able to get your money back when you need/want it.

When you decide to invest your hard earned money, it should only be when you are ready. It is also important that you seek advice to ensure it is being invested in the correct way to meet your goals and expectations. We always advise that you have an emergency cash fund and that you are in control of any debt before you invest.

Our investment process is designed to fully meet the needs and objectives of our clients. We utilise a wide range of investment solutions chosen from the whole of the market to meet the client requirements identified; from full discretionary and bespoke investment options; to risk related model portfolios.

We will need to establish and discuss the following with you: goals and objectives, timescales, your attitude to risk / capacity for loss and what you expect the investment to do.

When investing you need to take account of these risks and consequences that these may have on the achievement of the goals in your financial plan. Risk profiling is the process for determining an appropriate investment strategy for you with regard to risk. It has four primary aspects, your views on which have been taken into account in making our recommendations to you.

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1. Assessing risk required

We will talk to you to understand your goals, current and anticipated income and expenses, and current and anticipated assets and liabilities. We will work through with you the return needed to meet your future cash flow needs. And in turn we have agreed the most appropriate investment solutions for your needs.

2. Capacity for loss

Your capacity for loss is a second key element of your overall appetite towards bearing capital risk i.e. your ability to manage financially if a loss occurs. Your capacity for loss is considered during our discussions. We will undertake an assessment of your financial position (including a review of your income, expenditure, assets and liabilities). We will discuss the effect the loss of any capital invested would have in relation to your standard of living and/or your future objectives.

3. Risk tolerance

Unlike risk required and capacity for loss, which are financial calculations, risk tolerance is psychological. Risk tolerance is how you feel about taking risk. For example, you may say that it is very important that your investments maintain their purchasing power and also that any fall in the value of your investments would make you feel uncomfortable.

4. Your Knowledge & experience of financial products

Knowledge and experience is about assessing what your previous experiences have been in relation to various types of financial products. As part of this we consider what different financial products you have previously purchased and whether you have done this having received advice or whether you acted on your own without any advice. This helps us to assess your level of understanding of different products. We will discuss market fluctuations, and how these might impact on the level of growth or income within your investments, and also how exposure to risk means that you can lose all or part of your investment.
Please contact us for more information, or if you require advice
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