Our four top tips to wealth management
At Tribeca, a critical part of our role in providing financial advice is to help you manage your wealth and investment strategies – through the good and not so good times.
As we are all know too well, life can be unpredictable. And when it comes to managing finances, instability can have a devastating impact. The good news is that, by being strategic about your wealth management in uncertain times, you can help safeguard your financial security – and prosper.
Giving you a sense of control and freedom regarding your financial future is what we strive for as wealth managers and trusted advisors. So we’ve put together a broad range of practical wealth management tips for shoring up your financial position and growing your wealth.
Diversify your investments
As we’ve witnessed throughout the pandemic, an economic crash in one sector can lead to a boom in another industry. By diversifying in different types of industries, your finances are better protected.
When you spread your investments over asset classes such as property, bonds, shares and commodities, you open up opportunities for both short-term and long-term financial growth. And you don’t have all your eggs in one basket. Although diversification doesn’t mean you’re guaranteed complete protection from financial losses, it’s a strategy that can definitely minimise your risks.
Diversification also means mixing up your investments within asset classes. A portfolio that has a good balance of shares in both small and big business, as well as businesses in different geographical territories is another smart way to reduce risks.
Acknowledge when you need professional advice
Honing a robust investment strategy requires experience and specialised knowledge and, even if you only utilise professionals to help set things up for your individual circumstances, it can be an important investment for your healthy financial future.
In a global 2020 industry report, it was found that if someone with an investment balance of $250,000 decided to sell to cash in March 2020, they would have locked in losses of more than $50,000 by the end of May. Whereas a client who was advised to stay invested during the volatility would have recovered almost $20,000 during that same time. Since then most returns are now in the black.
The key takeaway is an effective advisor can provide enormous value in coaching clients through difficult times; supporting them to ensure they don’t lose sight and focus of their long-term goals. And a good advisor won’t just rely on their own understanding. They will access a network of people and resources to help monitor market fluctuations on a daily basis and make informed decisions about when to invest more, when to hold, or when to sell.
Understand risk management
Taking risks with your investments might seem fun but one of the benefits of working with trusted wealth managers is that they help you understand the ramifications of your appetite for risk – and how to keep it satisfied without losing all your money on impulsive decisions.
Taking risks is less frightening in a healthy market. When there is uncertainty about a global economic future, fluctuations in the market can have a bigger impact and risk needs to be viewed through a very different lens.
It’s at times like this that a calm, clear and impartial voice can be worth its weight in gold. Like reviewing your portfolio in case it needs rebalancing due to recent market movements. Or making adjustments to suit your risk tolerance if your financial situation has been impacted. It may even be time to grow your investments depending on your end goals and life stage.
We can help you identify your risk profile using tools such as our financial wellbeing matrix. Read our Ask the Experts article on financial wellbeing and our holistic approach to solutions.
Create a cash buffer
Any wealth management strategy needs to incorporate a cash-on-hand buffer to help you ride out the inevitable tough times. Liquidating assets when times get tough is never a positive thing, so to minimise the impact investment losses may have on your day-to-day life, keeping cash close by for emergency situations is a critical way to protect your financial future.
It can also prevent you from making decisions that might see your losses become even worse.
At Tribeca, we advise every client to have at least three months salary available if needed, whether that’s a buffer for an emergency, short-term funds for a business or investment, or to know you have added protection to cope with the emotional ride of a fluctuating stock market
We can set up this structure to make it easier for you to build up these cash reserves, as well as regularly touch base with you to make any changes and help keep you on track.
For more wealth management and investment tips or to talk to us about how we can help protect your financial future, we’re always ready to chat. Please talk to your advisor or arrange an appointment with one of our Tribeca Tribe here.