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In times of global and economic uncertainty, it can often be a difficult decision to know what best to do with your money and how or when to invest. Interest rates continue to be at an all-time low and markets are becoming increasing volatile after reaching record breaking highs.
At GilesSmith, we always pride ourselves on taking a common sense approach when it comes to investing. When markets are preforming well – which they have been for the last eight years, the natural instinct is to invest more or begin to think about jumping on the band waggon. Historical events such as the tech stock bubble and more recently with Bitcoin, investors can see significant growth. However, by the time this hits the media it is often too late and people begin to start investing when markets are at their high. This is when you often hear investors losing significant amounts of money when markets crash soon after reaching these highs. When markets are high, the downside risk is often far greater than the upside – ie the values can drop more than the potential future return.
For the last two to three years, we have encouraged investors not to invest new monies into the markets. However, we have seen markets continue to increase in what has turned out to be one of the longest bull market since the Second World War. History will dictate that the markets will go down at some point – the question is……..when?
When you invest, it is always better to invest when markets are low. This is when the upside risk is far greater than the downside. The problem is, no one (and we mean no one) really knows when the markets will be at their lowest point or begin to enter into a bear market. A bull market is when markets are going up – a bear market is when markets are coming down.
There is a saying in the industry known as ‘pound cost averaging’. This is where you invest on a regular basis to take advantage of potentially lower prices in the market should they begin to fall. This begins to create added value and the situation that it would be better for the markets to fall at the beginning of your investment journey as oppose to the desire for them to increase following a lump sum investment. The problem however, is that investing on a regular basis has often been difficult to access with providers not usually being interested in lower value investing. Those that do, are often faced with higher charges and the outcome (i.e. how the money is actually invested) are often poor for the investor.
At GilesSmith we have created DirectInvest by teaming up with True Potential who lead the way in technology innovation within the financial industry. DirectInvest gives investors the ability to invest from just £50 with the ability to top this up at any time from as little as £1. By providing you with the tools, you can now invest without the need for face to face financial advice, therefore, there are no initial fees when you invest. This means that if you invest £1, the full £1 is invested. More so, this doesn’t mean your monies end up invested in a poorly performing fund. Investment Portfolios provided by True Potential are fully managed in some of the worlds most recognised fund providers. Portfolios invest in up to eight multi asset funds and are rebalanced on a monthly basis by an Independent Investment Committee. This ensures the portfolios always remain within the individuals chosen risk profile and are rebalanced not only for the past, but also for the future. This is referred to as discretionary fund management which has historically only been available to high net worth individuals.
We believe that investing little and often is the key to maximising value and to create better outcomes for our clients.
To find out more about DirectInvest click here