The price you pay for an ill-fitting investment portfolio could be costly. You could find that your money is not working as hard as you would like it to, or it is difficult to access when you need it. Even worse, it could be eaten away.
The good news is that with professional guidance you can find the perfect fit for you.
First, you need to be clear about how much risk you are willing to take. If you want low risk, you have to settle for low returns, but take on more risk and you could potentially face bigger rewards.
It is extremely difficult, however, to effectively assess your own tolerance for risk. Instead, speak to an experienced adviser who can ask the right questions and use appropriate tools to create a clear and objective risk profile for you.
Without some element of risk, you may struggle to outpace inflation and could lose money, especially with longer term bank deposits. An adviser can present alternative options to help control risk within your defined boundaries. For example, you could stagger the timing of your investments in riskier assets to reduce your exposure to market volatility.
The longer you have to invest, the more risk you can generally afford to take. With time, you can ride out market turbulence and benefit from compound returns. Understanding your time horizon is also the key to future-proofing your investments to make sure you can get hold of them when you need to. You never know when your plans may change, so it is important to make sure you hold some liquid assets.
A good portfolio also minimises risk by putting your eggs in multiple, unrelated baskets, diversified by asset type, region and market sector to limit exposure in any one area. You can take diversification further by choosing an adviser who uses a ‘multi-manager’ approach to spread your investments out among several carefully-selected fund managers.
Finally, you should never underestimate the effect of tax on your investments. British expatriates can make the most of tax advantages in both Portugal and the UK by speaking to someone who specialises in both tax regimes.
Remember that your circumstances change over time, so what fits you now may not be so suitable in years to come. It is crucial to regularly review how you manage your wealth to make sure it keeps up with your changing circumstances and objectives.

By Gavin Scott, Senior Partner, Blevins Franks

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