ARTICLES

The traditional risk-based investment approach, which determined how a client’s assets are invested based on their risk profile, aims to maximise returns for a given level of risk. Success is measured by comparing returns against market benchmarks, suggesting that investors should be pleased with negative returns, provided they are less negative than the benchmark! The approach also entails a high level of volatility that can decimate a client’s capital, particularly if they need to access their funds in the near term or lose faith in their investment plan and crystalise their losses.

Dynamic Asset Portfolio Manager, Jerome Lander, discusses the risks of the traditional risk based 'strategic asset allocation' - particularly during the very difficult market conditions we face today. He argues that unless advisers change the way that investor's money is managed, there's really no way to manage that risk.

Goals Based Advice is just the first step in Goals Based Investing.

Equity markets have bounced well over 20% since the lows just over a month ago, so technically we are already in a new bull market. 

With peak new cases now behind us, the economy agitating to reopen and governments starting to ease restrictions, is the massive fiscal and monetary stimulus in the pipes about to prove the bulls spectacularly right?

During market downturns, investors are commonly advised to stick with their strategic asset allocation rather than crystalise their losses in the hope that the downturn will be short lived and that returns will revert to historical norms.

Sequencing risk is one of the most important things to consider when constructing your investment portfolio.

The premise of Goals Based Investing is to focus each investment portfolio on specific individual personal and lifestyle goals. Those goals inform the right timeframe, risk and return parameters, which in turn determine the best asset allocation and investment mix. Goals can be short-term, such as taking a holiday, medium-term, such as renovating or paying school fees, and long-term, such as saving for retirement.