When we talk to people about investing, many people worry that it’s a risky business. In their heads, it’s only one step away from placing all their hard-earned cash on red and waiting for the roulette wheel to spin. Certainly, there are no guarantees, and investments always come with a certain level of risk – but it honestly doesn’t have to be that much of a gamble!
At Fortitude, our approach to investing is a little more scientific. All of our investment advice is designed with our clients’ long-term goals in mind, while also taking into account the level of risk they’re willing to take. Some are risk-averse, cautious investors who feel the falls more than the gains – in fact, they hardly seem to notice when their investments are rising steadily. On the other hand, we also work with some risk-loving people. They like to see a higher return on their investments – and aren’t afraid of more ups and downs along the way.
It doesn’t have to be a risky business
We all know that markets rise and fall. We saw a tumble last year at the start of the pandemic. And then we also saw the recovery as the world adjusted to the initial knee-jerk reaction – and then got on with business as usual. Our job is always to make sure we don’t expose our clients to too much investment risk, but at the same time just enough to give them the potential to provide the return they need. It’s just a question of balance.
Finding your sweet spot
Everyone has a risk level that they’re comfortable with – and we can get a pretty good idea of where that is by using psychometric risk profiling. We use a Risk Tolerance Toolkit™ system by FinaMetrica. It’s powered by expertise from the London School of Economics. And since it was launched in 1998, it has gained international recognition as the world’s best and most reliable system. And that’s probably the reason it’s used by financial advisers in over 20 countries worldwide.
It incorporates a questionnaire to help identify your own tolerance to risk, a method for using the results as part of the financial planning process, and a personalised explanation of how your investments might perform in the future. It all adds up to a simple system that clearly identifies your attitude to risk and lets you make properly informed decisions and invest with more confidence.
Take your time
The thing about investing is that it always works best if you’re prepared to take a long-term approach. From our experience, whether the markets rise or fall, it’s important to not lose your nerve. Keep a calm head, stay invested, and things should all balance out to bring you a favourable return on your money.
At Fortitude, we never forget that it’s your money – and your lifestyle goals at stake. If you’d like to talk to us about our investment approach or the way we deal with risk profiling, please get in touch.