Steps for Successful Investment Planning

So what is Investment Planning

No one invests their money to make a loss….but a poor roadmap can magnify bad investment decisions.

Fundamentally, investment planning is identifying a strategy, a specific investment or product and then placing your hard earned money by way of either :

> a direct purchase of an asset or

> a purchase of units in a “managed fund” that may hold multiple assets

Our Approach

When we build and review your investment portfolios, we base our recommendations on a number of investment beliefs, which are fundamental to the way we operate our business. We believe:

One of the best ways to grow wealth is to use exceptional investment managers in conjunction with great financial planners, who together apply their skills, resources and research to build portfolios of individual investments.
Deep research is the only reliable way to identify exceptional investment managers. Brand and past performance are unreliable predictors of future performance.
Diversification is one way to provide more consistent investment outcomes.
A long-term approach should be used if your financial goals are long-term
Efficient implementation reduces the costs of running a portfolio.

These beliefs are central to any investment advice & recommendations we make when creating clients’ investment portfolios.

Our Process

Is outcome driven…

So once the outcome is clearly identified this drives the strategy that then drives the investment planning process – not the other way around.

You should always beware when a solution is provided before your goals and outcomes are clearly defined.

Constructing Investment Portfolios

We use a 2 stage financial planning process when we build investment portfolios:

Stage 1 involves identifying an appropriate asset allocation for your goals, timeframe and risk tolerance.

We aim to select an asset allocation that is likely to achieve the returns required to achieve your desired goals, with the lowest amount of volatility possible.

Stage 2 involves constructing your portfolio, or deciding how to invest the different allocations to each asset class, in order to apply our investment beliefs.

This process helps to maximise the returns and manage the risks associated with investing in each individual asset class that is appropriate for your goals, timeframe and risk tolerance.

Determining an Appropriate Asset Allocation

The most important decision when investment planning for your portfolio is your recommended asset allocation. History and research has shown that asset allocation is responsible for over 90% of the variation in returns between portfolios, and is therefore one of the most important decisions we make for your portfolio.

Potential Asset Allocations

Once your investment timeframe and your required rate of return has been identified, we can determine which potential risk profile or asset allocation may be appropriate to achieve your lifestyle goals and objectives.

Determining your final asset allocation

The asset allocation that is appropriate for your risk tolerance may or may not be consistent with the asset allocation that has been determined appropriate for your return requirement and investment timeframe.

If it is consistent, our financial planners can construct your investment portfolio with the appropriate asset allocation.

However, if it is not consistent, we need to review your risk tolerance, required rate of return based on your goals and objectives, and/or your investment timeframe to determine the most appropriate course of action for you.

Diversification can lead to more consistent investment outcomes

Diversification is a genuine way of reducing uncertainty without compromising expected future returns.

Diversification involves spreading your investment amongst asset classes, investment managers and securities in order to reduce risk and the impact that any single one of these can have on your portfolio.

While most people understand the basic concept of diversification, many still don’t fully diversify their portfolio.

For example, just holding several stocks is not good diversification, especially if they have similar risk factors by belonging to similar industry group, asset classes, or even selected by investment managers using a similar investment process.

To fully utilise the benefit of diversification, our financial planners construct your portfolios so that it is diversified in three ways

Across asset classes
Within asset classes
Across investment managers.

If you would like to find out more or to discuss your individual situation, contact us for financial advice from one of our qualified financial advisers.