1) Investing is only for rich people
Whilst this was probably true in the past, now you can make investments from as little as €20 a month. Online platforms allow everyone to access a wide range of investment options from cash or stocks and shares ISAs to making regular monthly pension contributions. There are advantages to making smaller regular contributions to your investments – you quickly get used to the money leaving your current account and having regular payments helps to mitigate any ups and downs in the market. In fact, many investment products have even smaller minimum investment amounts so there’s really nothing to stop you from becoming an investor.
2) Investing is too risky
Many people shy away from investments because they believe that they could lose all their money. High profile cases such as those where people have lost their pension savings do not help new investors to feel confident. Of course, when you make any investment, the value could go down as well as up, but not all investments come with the same risk profile. Investing over the long-term in real-estate and the stock market has historically produced excellent returns. The key to success and continued growth in your investments is regular (at least annual) reviews of your financial goals and measuring performance of your portfolio to see where adjustments may be needed.
All investments can be categorised from low to high risk. Volatile investments such as cryptocurrency means you could gain a lot or potentially lose everything. At the other end of the scale, you can invest in low-risk options such as bonds and gilts and although this is not a no-risk option, its value wouldn’t typically be expected to fluctuate much so the potential gains would be much smaller.
3) My money is locked-in for several years
In reality, there are few investments that prevent you from withdrawing your money with the exception of pension schemes. However, to maximise your investment, it’s important to understand from the outset that the best returns will only be gained from keeping your holding over the medium to long-term. The longer you hold an investment, the more chance you have of smoothing out any bumps in the stock market and making positive returns. So, generally there are no fixed periods you must invest for, but there may be penalties for withdrawing your money early, especially if you are forced to sell when the market has taken a downturn. Aim to hold 6-9 months’ worth of expenses in a current account so you can use this if you need short-term funds rather than breaking into your investment portfolio.
4) I’m too young to make investments
You are never too young to start investing in your future. With the compounding effect of interest, even small amounts invested on a regular basis can produce a sizeable pot when you retire. If you are a young adult, you might think that you have many years before you need to consider investing for your retirement, but the sooner you start saving into your pension, the less you will need to save in later years. There are a range of savings vehicles such as Life Insurance policies which enable you to grow your wealth over the medium to long-term in the most tax efficient way.
5) I can make investments myself on an app, so I don’t need a financial advisor
It is true that it is becoming easier to maintain and monitor investments using mobile apps that are user friendly, but this does not necessarily mean that you can make good investment decisions without the support of a qualified financial advisor. Apps make it simple to manage your portfolios, but it’s also very easy to make trades that might not be in your best interest. Using a qualified investment or financial advisor to check your planned investments could save you from making a decision that has an adverse long-term impact on your wealth.
Advice from Blacktower Financial Management
Understanding your investment options requires significant research. Blacktower Financial Management has long-standing expertise to ensure you optimise your portfolio to meet your investment goals. Contact one of the representatives at our Lisbon office today for your free no-obligation discussion.
Blacktower in Portugal
Blacktower’s offices in Portugal can help you manage your wealth to your best advantage. For more information contact your local office.
Manuela Robinson is the Associate Director of Blacktower in the Algarve, Portugal, with offices in Quinta do Lago and Cascais. Blacktower Financial Management has been providing expert, localised, wealth management advice in Portugal for the last 20 years. We can help with specialist, independent advice on securing your financial future. Get in touch with us on (+351) 289 355 685 or email us at firstname.lastname@example.org.