Developing an Investment Portfolio – Debunking the Myths & Facts Around Investments

Developing an investment portfolio can mean different things to many different people – investment opportunities are extremely varied and whilst all investments come with a varying degree of risk, there remains a common perception that investments are for the financially well-off with both money to spare and expertise close to hand. Depending on your investment budget and interests there are a range of options but one thing is clear; investing is open to all.

Our team has put together a few of the myths and realities of developing your investment portfolio:

Myth 1- Investing is too risky

Fact1 – Yes of course there is a risk and you may not always make as much as you invested but all investments are scaled on their risk factors. On the one hand we have the extreme end of the spectrum such as hedge betting where the original investment yo-yo’s – you may make a lot or you may also lose a lot but on the other hand we lower risk investments for the new and cautious investor.

Investments may fluctuate but in a more narrow range of markers – a good way to try to make your money work for you, these investments may offer some good yields.

Why take the risk? Well if you take a calculated and affordable risk you may be able to grow your funds.

Myth 2 – You have to be wealthy to begin with

Fact 2 – This may have been true historically but with a much wider range of investment opportunities, it is a lot more accessible these days. Easy to access online fund platforms and investment advisory services means that anyone can now invest with as much or as little as they like!

Myth 3 – You have lock your money away

Fact 3 – There is a misconception that your money should be locked away in medium to long term investments, or that you should keep it invested for a set number of years. On the whole this is good advice as markets are volatile – the longer investments are held, in theory they should ride any market fluctuations and return some ROI.

Myth 4 – You need to be an expert to invest

Fact 4 – Investing say in shares carries an inherent risk but by keeping a close eye in the markets you can place some good investments. Share investments are dictated by a wide range of factors included global supply and demand, geopolitics, interest rates and the wider economy. Many share dealing platforms will give you helpful share and market analysis as well as weekly, daily, monthly and one year share price ranges.

Another useful option is to invest into a fund(s) – that is essentially a ready made basket of investments that come from low to high risk so you can select the right package for you. Be it an investment in bonds, shares or property there are many risk factored investment opportunities – many banks and private funds will also be able to assist with a package of investments, in any case we recommend taking advice before investing!

Myth 5 – You have to regularly monitor your investments

Fact 5 – Whilst it is tempting to obsessively monitor your newly placed shares, a little objectivity is a good thing. If you are new to share investments for example we would recommend to check the shares at the market open, midday and market close with some alerts setup to notify you of any price drop or spike.

With a regular investment into a multi-asset fund you can place an investment and then effectively forget about it – check on now and then of course but it’s a low-maintenance investment tool.

Myth 6: You have to know when it’s the right time to buy

Fact 6 – There is a perception that to make money on the markets, you need to buy when stocks are low and sell when they’re high. Investors can spend a lot of time and energy trying to identify when a share price has bottomed out or hit its peak to find the perfect time to buy or sell.

There are many factors that impact an investment and predicting an outcome is all but impossible – the key thing is to invest for as long as you can within your budget – the market will always rule and timing is not the most important consideration. There will always be some downturns but the important thing is to keep your investments (if possible) during the downturn to ride out the negative curve.

Myth 7 – It’s a quick way to make money

Fact 7 – This myth is categorically false and many have lost it all chasing the quick buck – investments are and have always been a longer term investment.

Investing hasn’t always had the best reputation and with the dotcom and 2008 crash in recent memory and now the coronavirus market tumble – people are right to be extremely cautious about parting with their hard earned money.

That said investing takes many forms and whilst we should be cautious it can also be rewarding, fun and a positive thing to do – with many different types and form of investing packages available to all budgets there is something for everyone; from the novice investor to an experienced market player there is something for us all but taking the right advice is essential!

Introducing Fintuity – The Only Digital IFA in the UK!

Fintuity is like a traditional IFA, only we are an online adviser which means we can offer a more cost effective, time-sensitive and flexible service! We offer the full range of IFA services via our digital platform, at below industry rates and at your convenience. Please do not hesitate to get in touch to see how we can assist you.

For all enquiries please visit www.fintuity.com or contact Fintuity’s Communications Manager, Nic Cobb at nic.cobb@fintuity.com.

Please Note: All information, references and dates included in this article were accurate at the time of publishing.