Financial Planning

Investment

Finwell offers individually tailored advice on your investments based on a review of your personal circumstances, requirements and attitudes to risk.

 It all begins with an assessment of what asset classes work best to achieve your goals with a tolerable level of risk and therefore an acceptable chance of gain and in turn loss. Not all investments consistently perform well, and it is when things don’t’ go well that risk management matters most. Our approach is to help you understand that and focus your portfolio to achieve your objective without taking unnecessary or excessive risk.

In the modern market, there are a wide array of investment vehicles. The main asset classes are:

Shares

Equities or stocks allow investors ownership of a part of a company. Share prices vary daily as the perceived price of the company changes. Returns usually include capital movement (up or down) and income through dividends payable to shareholders. Shares are typically a highly volatile asset class and many people fail to prepare themselves for this. An investor would want to have a longer time frame (5 years +) before considering shares as an asset class because investments tend to have periods where significant value shifts occur and the requirement to sell in these times can result in losses. When understood well shares can be a great asset class for the growth of wealth.

Property

This includes direct and indirect investment in residential, commercial and industrial property assets. It has a higher risk than bond/fixed interest assets. Where investing in indirect property assets, variance in value can be severe in the same vein as with shares, however, yields tend to be higher in property assets than direct shares. When looking at direct property investment, the ability to use leverage on the asset makes for amplification of risk and also a focused risk in the area which the investment is placed. Making property selection the essential criteria to focus on.

Property is typically less liquid than other asset classes resulting in a higher recommended minimum time frame of 7 years +.

Bonds / Fixed interest

These are fixed interest assets typically issued by a government or company where you are lending money to that entity, so it can raise funds to finance spending. Bondholders lend money in return for regular interest payments plus a final repayment after a certain period. These assets are typically safer, in that they don’t tend to vary in value unless the interest rates of competing bonds changes. Investors with a shorter timeframe would typically invest in bonds to more of a degree.

Cash

Cash equivalents are short-term investments which are highly liquid and have a high credit quality. They include bank deposits, term deposits, savings and cheque account and cash management trusts. They provide a stable and low-risk income in the form of regular interest payments. Suitable for investors with a short-term outlook and low tolerance to risk.

The investment selection process

Following a detailed review of your current financial position, aspirations and goals, we’d analyse these factors with you. Then from there we would go through the nature of investments that you can choose to assist you to achieve your goals. After a financial review with an advisor you work with us to establish an investment strategy that is right for you based on an informed understanding of your options. Whether your aim is wealth creation and management or capital preservation, we endeavour to strike the right balance between potential return, accessibility/liquidity, risk and reward with you. Importantly, the value of investments and the income from them may fall as well as rise over time. You may have great success or great losses over short timeframes, at points investments might step back and worry you. That is the nature of the financial markets and so it’s essential to have realistic expectations of your investments and understand the time frames that you may have to invest for your goals to be achieved.

This is why reviewing the risks inherent in your investment choices to a point of good understanding first up is a key to your prosperity and hopefully to the beneficial journey with your investments over time.

 

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