Achieving the optimum investment portfolio is not rocket science. Here, Rupert Holderness shares his foolproof checklist to success
Whether you are an expat or planning to move to France, this handy checklist will set you on the right path to achieve the optimum investment portfolio. Let’s begin.
1) Choosing the right tax-efficient structure :
Suitable tax-efficient structures can gather investments in one place and legitimately protect you from paying more tax than necessary.
This is usually more straightforward in the UK, where the local rules tend to be familiar, versus the complex foreign tax system in France. You need to establish your tax liabilities – and identify opportunities – in both countries. An adviser with cross-border experience who understands the French taxation system will be best placed to help here.
Otherwise, you could see investment returns slashed by taxes that could have been avoided or significantly reduced.
2) Identifying your particular appetite for risk :
Today’s historically low interest rates mean returns may struggle to keep up with inflation. Most people recognise that some exposure to risk gives us a better chance of producing real returns over time.
However, unless you find the right balance of risk and reward, you could end up with an investment portfolio that does not suit you. Your adviser should start by mapping your risk profile, while taking into account your goals and timeline for investing.
3) Matching your risk profile to the optimum portfolio :
Generally, the lower the risk, the lower the likely returns. But it is difficult to take a step back and accurately pinpoint your comfort zone. Without professional, objective guidance to match you to your optimum blend of investments, you could find yourself with a portfolio that is either too risky or too cautious for you.
4) Diversify! :
Your investments should be diversified to avoid overexposure in any one area. By spreading across different asset types – equities, government or corporate bonds, property, cash – as well as regions and markets, your portfolio has the potential to produce positive returns without being vulnerable to any single area. A ‘multi-manager’ approach can diversify further by reducing your reliance on one investment manager making the right decisions.
5) Review your portfolio regularly :
It is important to review your portfolio once a year to re-balance it and make sure it is still in line with your unique risk profile, aims and circumstances.
With Brexit and global political developments likely to unsettle markets and currencies, regular reviews are vital to help control risk and encourage a positive effect on portfolio performance. While there is no ‘one size fits all’ solution for investing, these five key principles are the cornerstone of any successful wealth management strategy. Applying them in the right way will give you the peace of mind of knowing your investments are best placed to meet your unique needs.
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