THE volatility of world stock markets over the past six months and the near-collapse of Northern Rock have come as a shock to savers. Even mature economies report fragile conditions.
Now is, therefore, an excellent time to seek investment advice f
rom an experienced and independent financial adviser who can take into account your attitude to risk.
Long gone are the days when clients were asked to tick a box on a risk scale of one to ten to establish which investment was most suitable. Most would probably pick four or five without knowing what that meant. Today, leading advisers use the latest risk-profiling software to help a client. Key factors will be age, family commitments, funding a mortgage and whether saving for retirement or needing to supplement current pension income. There may be specific demands, such as saving for a child’s or grandchild’s education or paying for a wedding.
Constructing an investment port-folio is like putting a football team together. A different set of skills to tackle planned and unforeseen events ahead is the answer. A new player may help the team rediscover its winning form. It’s vital to review assets and tactics. A top-performing fund manager may have moved or a sector previously overlooked may now be appropriate.
Consider what you want your savings to provide, how much you can afford to invest, perhaps contributing monthly rather than in lump sums if paying out of income, and how long it can be invested for.
Don’t rely too much on historic investment returns, but use advisers’ software to project hundreds of future scenarios to give a better indication of the level and spread of returns.
Be realistic about your expectations. Not every investment can perform in stellar fashion. Diversification means that some savings decline less, such as some dividend-paying shares and fixed-income investments.

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