Disposable income levels are plummeting in the UK, with households having. This is the first time in 30 years that the outgoings of people in Britain have exceeded their income, as a harsh economic climate continues to take its toll.
From an investing perspective, this means that there’s a pressing need to select the right strategy for managing your capital. Otherwise, you’ll run the risk of making ill-informed decisions that cause your portfolio to lose considerable value over time.
So what are the best and most effective strategies for managing your investments, and which of these is most suited to your needs?
Here are some of our top picks:
- DIY Investment
We start with the cheapest investment management strategy, and one that requires you to use your own knowledge and experience to achieve your financial objectives.
There are benefits to this approach as you’ll retain full control of your portfolio and create an asset allocation that is entirely aligned with your risk profile.
However, the success of this strategy depends on the level of insight that you’re able to bring to the table. If you lack the requisite knowledge to make informed decisions or regularly rebalance your assets, you’ll find the DIY option unfit for purpose and lacking in inherent value.
In this respect, the cheapest strategy is not always the most effective, and it should only be considered by those with experience of the financial market.
- Investment Management Services
If you’re new to the financial markets but want to make the most of your investment capital, your best bet is to employ the services of an investment management and financial planning firm.
While not all companies of this type are created equal, outlets such ascombine basic financial planning with advanced investment services. This enables you to create a detailed investment structure as part of your wider financial plan, while also considering how your assets will be distributed in the event of your death.
It stands to reason that firms of this type will charge a fee for their services, but this is often transparent and usually pales in comparison with the potential returns.
The wealth management sector has enjoyed huge growth in recent times, thanks largely to the proliferation of big data and artificial intelligence (AI).
When combined, these technologies have evolved to underpin robo-advisers, which collate huge swathes of structured data and leverage this to create an investment portfolio in line with your risk specifications. Digital money managers than rebalance these assets on a regular basis while also offering a host of tax-related services and benefits.
This is an increasingly viable option, particularly with AI capabilities advancing to the point where this technology can collate unstructured data from blogs and social media.
However, it’s an investment strategy that needs to be given careful consideration, as you’ll need to understand the purpose and function of robo-advisers before even thinking about entrusting them with your capital.