HOW TO BENEFIT FROM POSITIVE RETURNS?
With interest rates at 0%, where should you hold your capital? This is one of the most common problems our clients face and as a result we have a number of solutions available. With inflation on the rise you need to make sure your capital is also benefiting from positive returns in order to ensure it grows either inline with or above inflation.
Emergency Fund
Firstly you need to make sure you have acquired your emergency fund. This should be at least 3-6 months living expenses. This capital should remain easily accessible. Although you will receive 0% returns, this capital can be withdrawn instantly should you need it.
Knowing your Attitude To Risk
Once you have earmarked your emergency fund, you need to know what your attitude to risk is before looking to invest your excess capital. You can do this by using our online Risk Profiler.
Diversification
Now you know how much you are looking to invest and your ATR, you need to create your portfolio. If you have little or no financial knowledge we strongly recommend that you work with your Wealth Manager. If you do not currently have someone you can turn to for assistance on this matter, please do feel free to contact one of our advisors by completing the form at the bottom of this page.
Diversification within your portfolio is extremely important as it helps mitigate risk by ensuring you are not over exposed to one particular asset class. For an example of how to construct a balanced portfolio CLICK HERE.
You can make a one off investment or a regular monthly investment. Most of our clients combine these two strategies in order to maximise their gains and minimise their risk.
One Off Investments
Your one off investment allows you to ensure the capital you have already accumulated, is invested and generating growth. We currently advise caution with this mode of investment, as it is important that you protect against any potential market downside, in order to maximise long term returns. There are some alternative instruments available that offer protection and a defined return, often regardless of short term volatility. These ensure investors can generate solid returns whether the market moves up, down or sideways.
Regular/Monthly Investments
While working in Switzerland we all benefit from attractive packages and lower taxes. As a result we enjoy a healthy surplus income and are able to save on a regular basis. The issue we have now is that our savings are not growing. The next step is to divert some of your surplus income to an account that invests your capital on a monthly basis. This enables you to implement a unit cost averaging strategy. Doing so will help you mitigate risk by purchasing units on a regular basis. For further information about the benefits of unit cost averaging you can view our white paper by CLICKING HERE
What To Do Next?
Now you know what your attitude to risk is and how much you are able to save/invest, the next step is to ACT. Either speak with your bank or wealth manager to put a strategy in place. If you do not have a wealth manager or would like a second opinion please do feel free to contact us and speak with one of our advisors. You can do so by completing the below form.
