Portfolio Management

Each client’s goals and objectives are different and therefore it makes sense that each portfolio should be different and individualised to meet your personal needs. After we have ascertained your goals and objectives we determine how much money you will need from your investments within the next few years (in particular retirees drawing an income stream), how much you will need for big ticket expenses within the next five years such as home renovations, overseas trips, children’s education, etc.

From here we look at your risk tolerance as well as capacity to take risk and formulate a strategy for how and where you should invest your capital (generally referred to as asset allocation). Short term money needed will be invested in minimal risk low return investments whereas money not needed for five years plus will be invested in growth assets which despite some higher risk offers a significantly higher return.

There is no ‘risk free’ investment and the five main risks to anyone’s portfolios are business risk, financial risk, market risk, purchasing power risk, interest rate and reinvestment risk. We seek to minimise the damage these risks have on a client’s portfolio through monitoring and reviewing investments, diversification, and rebalancing investments where appropriate.

Our investments are not done in a set and forget manner as the Global Financial Crisis proved that this method is flawed, and clients can lose money permanently. Good portfolio management is buying assets low and selling assets high. This approach, despite sounding easy, is very difficult to do. How many people invested in the share market in 2009 when it was at its lowest (FYI went up 54% in the three years after).

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