Accepting that there is an element of risk in every investment is one of the main points highlighted by Carbon’s Investment Director, Barry O’Neill, in his article in Monday’s edition of the Press & Journal.
Barry also points out that risk even extends to savings; whether you keep cash under the mattress, or ‘safely’ in a bank, there is still an element of risk involved. Your home insurance won’t cover large volumes of cash being kept in the house and if your bank defaults, the compensation payable is a maximum of £75,000 per person. Whether it’s at home or in the bank, Barry rightly advises that neither is a good option because ultimately they are exposed over the long-term to the erosive effect of inflation.
Barry’s advice is to take only as much risk as you need to the achieve your investment objectives. He also highlights that diversification will minimise risk; for example, blending shares and less risky government bonds helps to smooth out the ups and downs.
The article also highlighted the importance of regularly reviewing things to take account of major events like the EU referendum. Over time, the level of risk in your portfolio could have increased beyond that you require or are comfortable with.
Barry’s overall advice is to diversify away as much of the risk as possible by spreading your investments widely and to regularly re-balance your investments back into line with your optimum mix of assets to deliver the returns you need, while controlling the risk.
Given recent events, this is a timely article from Barry that is well worth a read, you can read the whole article here or by clicking on the image below.
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You can view Barry O’Neill’s profile here.