Investment Considerations

Investment Time Frame

Different investments have different time frames. Some are designed to provide investment returns in the short-term, whilst others are designed to provide long-term capital growth. If you withdraw your money from an investment before its recommended investment period, you may not receive the returns you expected or the value of your investments may be less than what was originally invested.

Usually, your age and proximity to retirement will determine whether you are investing for the:

  • Short term (1 to 3 years)
  • Medium term (3 to 7 years)
  • Long term (more than 7 years)

Investment Risk

Investment risk refers to the likelihood of volatility or fluctuation in investment returns. This may include a potential loss of some of your capital.

For example, risk can mean:

  • Your investment might increase or decrease in value due to a drop in market value
  • Your capital does not grow enough to keep pace with inflation
  • You won’t have enough money to draw a reasonable income when you retire

Your age, current financial situation and length of time to retirement could all be factors that influence your risk profile.

Diversification

Diversification refers to spreading your money across a range of different investments, asset classes and industry sectors in order to reduce your overall level of risk. It enables you to balance risk and return, across a number of asset classes, with rises in one asset class smoothing out falls in another. This means you can protect your money from a fall in value and reduce the risk of low or negative returns. Diversification can help to make the overall return from your portfolio more consistent.

It’s important to understand that the performance of the investment markets fluctuates and depending on the nature of your investment, negative returns will occur from time to time.

Our experience has shown us that it’s better to take a long-term view of your investment strategy.

HSFP can help you to decide the most appropriate investment strategy for you and your situation.