Choosing a broad spread of instruments in which to invest

If you require your money to provide the potential for capital growth or income, or a combination of both, and provided you are willing to accept an element of risk, pooled investments allow you to invest in a large, professionally managed portfolio of assets with many other investors. As a result of this, the risk is reduced due to the wider spread of investments in the portfolio.

Every investor is unique, but everyone faces the same trade-off between risk and reward

The best place to start when you are looking to build a diverse investment portfolio is to ask yourself why you’re building a portfolio. For most of us, the central task is to build a pot of money that involves you, the investor, taking some risk over the long term, at the end of which you will have ideally built up a sizeable portfolio of diversified assets that will last you through to your retirement years.

Minimising exposure to volatility and market setbacks

Investing would be easy if markets rose in a straight line. Unfortunately, that is rarely the case. Over the long term, assets such as shares and bonds have tended to produce positive returns, but there have been several bumps along the way. In any event, past performance of investments cannot be taken as a guide to their future performance.

Managing the risks you are exposed to in order to avoid suffering losses to your capital

Whether you’re planning to start investing your money, or even if you’re already a seasoned investor, it’s crucial to make sure you manage the risks you are exposed to in order to avoid suffering losses to your capital. The key is to build a diverse portfolio with a mix of different investments that makes sense for your attitude to risk.

Focusing on the long term for a more secure future

The UK is becoming a nation of savers, with three quarters (74%) of people saying they are currently saving, research from Scottish Widows has revealed.

Rewarding investors in UK-listed companies

Investors in UK-listed companies will be rewarded with an £85.8 billion payout in 2015, significantly better than last year, where investors suffered little or no growth in income according to Capita Asset Services’ ‘Dividend Monitor’. Dividend payouts from UK-listed companies made a strong start to 2015, prompting analysts to hike their forecasts for the year.

Grappling with a number of significant headwinds

Unlike the rest of the world, the European economy has been hit by not one, but two major crises in the last decade. A few years on, we consider whether Europe is set on a path to recovery.

Will the pension reforms have an effect on retirement planning?

Just under a third (30%) of people believe the recent pension reforms will affect their plans for retirement income. Responding to a Schroders survey, of the people who said pension reforms will affect retirement, a significant proportion (45%) said they are likely to consider taking some money as cash and putting the balance in an investment fund.

Cash is king
Another plan is to invest in an income fund, and 23% said they are looking to keep the money in cash. 29% are planning to put the money towards a luxury purchase, such as a dream holiday, and 28% said they would use the money to pay off their or their family’s debts[1].

Understanding the changes
The remaining 70% who did not think the reforms will affect their retirement income planning gave varied reasons for this. 20% said this was due to worrying about taxation issues, and 31% said it was down to not knowing what decisions to make and not fully understanding the changes. 11% admitted they didn’t have a pension.

Source data:
Part of the Schroders Global Investment Trends Survey 2015, 1,000 UK investors surveyed (2 June 2015). [1] Respondents could give more than one answer.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND UPON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST RATES AND TAX LEGISLATION.

Alternatives for income-seekers during a period of low interest rates

One of the tools available to the Bank of England to stimulate the economy is interest rates. Lower interest rates mean that it is cheaper to borrow money and people have more to spend, hopefully stimulating the economy and reducing the risk of deflation.

Alternatives for income-seekers during a period of low interest rates

One of the tools available to the Bank of England to stimulate the economy is interest rates. Lower interest rates mean that it is cheaper to borrow money and people have more to spend, hopefully stimulating the economy and reducing the risk of deflation.

Deciding how to weight your portfolio

Asset allocation is the bedrock of successful investing. The challenge for investors lies in deciding exactly how much to allocate to each asset class.

Investing in bonds, pooling your money with thousands of other small investors

Bonds are debt issued by either a government or a company and are an essential building block of many investors’ portfolios. When you buy a bond, you are effectively extending a loan to the issuer of the bond.

Professionally managed collective investment funds

Unit trusts and open-ended investment companies (OEICs) are professionally managed collective investment funds. Managers pool money from many investors and buy shares, bonds, property or cash assets and other investments. An open-ended fund could be visualised as a big pool of money – the money belongs to thousands of small investors.

Invest as much of your annual ISA allowance as you like in either a Stocks & Shares ISA or a Cash ISA, or any mixture of the two

Some people never look beyond Cash Individual Savings Accounts (ISAs), but by using Stocks & Shares ISAs too, you could get a higher return on your investment. Stocks & Shares ISAs can contain shares, bonds and investment funds. There are no restrictions about where in the world you can invest: it does not have to be all in the UK.

Planning for retirement in the new pensions landscape

The new pension savings market offers much more flexibility and choice post–6 April this year, which is a positive, but it can be overwhelming. For people planning for retirement in the new world of pension freedoms, there are both risks and opportunities – from passing on your pension to loved ones, to making the most of tax relief.