Investment & Wealth Management Advice From Isis Financial Planners, Independent Financial Advisers
Louis Letourneau, Chartered Financial Planner, MA, TEP, APFS has considerable experience in advising clients on creating, managing and securing wealth through investment. Louis can review investment strategies and advise you on how to achieve what you want from your wealth and investments.
Together with his highly experienced colleagues, Maggie Fleming (tax expert) andJane Mudge (pensions expert) they can offer you a holistic and very personal approach to financial planning and wealth management.
This page introduces some of the steps that Louis uses when planning clients' investments.You can also read about other aspects of investment and wealth management strategies.
If you would like to talk to Louis about your own investments and wealth management strategy, then please contact Isis Financial Planners.
It is vital that you plan for your future, but balance this planning with your current needs, enabling you to enjoy your life now and to ensure a secure lifestyle in the future.
It's important to take a holistic, rather than a piece-meal, approach to your investments and wealth management strategy. Here is a step-by-step approach to a developing a sensible financial strategy.
Step 1 Review your assets
Include all your savings and investments (ISAs, pensions, building society accounts etc.), but exclude the property you live in.
Sit down and work out how much you have and how it's divided between the main asset classes - cash, property, equities, fixed interest. At this point, if you haven't got an overall financial plan in place, it may be a bit of a hotchpotch. You've probably got a collection of ISAs and pension plans that you've acquired piecemeal over the years. But don't worry - this is just the starting point.
Step 2 Assessing your situation and objectives
Once you know what you have, you can start thinking about what you should have and draw up a plan.
The right investments for you will depend on a number of factors, the main ones being your objectives and expectations, your age, your attitude to risk and whether or not you need an income from your investments. These factors will dictate the strategy. The different factors affect each other, too. For example, if you're 57 and planning to retire at 60, you can't take too much risk with your investments if you need them to provide an income in a few years' time. Conversely, if you're 30 and expect to work until 60, you can invest the bulk of your resources in the equity markets for future growth.
Step 3 Your options
Asset allocation is the key to a successful investment strategy. All it means is that you (or your adviser) work out which types of asset you should invest in and in what proportions in order to achieve your objectives, and then construct an appropriate portfolio.
It's important to understand what the various asset classes are and what they actually mean. The main classes are:
Cash - Money on deposit. This is of course very low-risk. However, the problem with holding too much in cash is the inflation risk. Any rate of interest you can earn should be in excess of inflation so that the amount of your cash doesn't lose its future purchasing power in real terms.
Fixed interest is a low-risk investment consisting of gilts and corporate bonds. Gilts - (gilt-edged securities) are Government stocks and are effectively loans to the Government. Since it's highly unlikely that the British Government would ever default on its loans, they offer a high degree of security, although their prices do go up and down. The returns that they produce are closely linked to movements in interest rates. The gilts market has been negative recently. If you want a gilts element in your portfolio, you should look at index-linked gilts, as these protect against the risk of inflation.
Corporate bonds are similar in many ways to gilts, but are offered by limited companies and therefore carry a higher risk. There are varying degrees of quality of corporate bonds. Investment grade (i.e. good quality) bonds carry a lower risk than sub-investment grade bonds. As with gilts, the underlying capital value of corporate bonds is linked to movements in interest rates. Returns in the sector have been sluggish recently but they are an important component of a portfolio for someone who wants a lower risk investment.
Property funds normally invest only in commercial property, rarely residential. The commercial property sector doesn't normally correlate with the residential property sector. Recent performance has been surprisingly low as a result of the recession but there are signs of an improving market. Property may be coming back into fashion in the medium term as part of an overall balanced portfolio because of the traditional high yield that it can generate. In "normal" times property funds should form a part of an income portfolio.
Equities are quoted stocks and shares in different markets such as the UK, North America, Europe and the Far East. This is the most risky element of any portfolio but it's most likely to produce the highest returns; similarly, it could also produce the highest losses. Markets have been volatile over the past few years, but the present low-inflation environment is ideal for equities.
Step 4 Choosing appropriate funds
Once you decide on the overall asset allocation, it's a simple matter to choose funds (within a pension, ISA or other wrapper) which reflect this. The overriding factor of this planning is that your strategy should faithfully reflect your attitude to financial risk.
Step 5 Review
You should review your plan (with your adviser, if you wish) at regular intervals to make sure it's still appropriate to any changed circumstances or objectives. This also gives the opportunity to weed out any poorly-performing funds, but if the strategy is soundly established, and reflects your attitude to investment risk correctly, it shouldn't require more than the occasional 'tweak' to keep it on track.
Do you live in Oxford, Oxfordshire, the Cotswolds, London, Brighton, Sussex or further afield? We would love to talk to you about your own investments and wealth management planning. Contact Isis Financial Planners.
Also, see the other investment pages on this website: