BEACON WEALTH MANAGEMENT LTD
- Cash or Stocks and Shares?
May - July 2017
A Bank Savings Account, National Savings, Pensioner Bonds, Cash ISA’s (Individual Saving Accounts) and Premium Bonds appear regularly in our client’s investment portfolios.
OK, should I say they do before we discuss the alternatives?
Clearly for some clients the above all have their own merits, and can be maintained for the
right reasons, however, most cash type investments have returns of below 2% and thus do not even keep pace with inflation.
To make matters worse they can be fixed for between 2 and 5 year periods.
As an ex-accountant, I am not one for taking risks and I like to have control over my own funds.
My ISAs, Unit Trusts and Pensions are all managed within the Beacon portfolios, which means I, like our clients, have access to any or all of my funds within 10 working days (quicker if urgent), without any penalty or admin charge.
Each quarter I receive a client summary of my holdings and a report for the last 12 months.
In my latest report (to 30/3/17) it shows a Net return (i.e. after all charges), for one plan of 16.27% and for the majority 13.72%.
I realise funds go up as well as down, and I have mentioned previously in different articles I write, that we are ranked 4th out of 145 comparable portfolios in the UK, for our most popular portfolio.
We are also ranked 3rd out of 145 comparable portfolios in the UK for our ethical portfolio of the same average risk level.
Funds will not always go up, and Brexit as well as the French and German elections, will have an effect on the Stirling/Euro exchange rate, which then impacts on share values.
A cheap pound makes stock values in the UK go up, because most medium and large companies do most of their trade overseas. Thus any profit on sales is measured usually in Euros or Dollars; and if these currencies are stronger than the pound, then when they are converted back into pounds you get more – thus more profit leads to an increased share price.
World events do, however, mean even more attention is being given to the asset allocation within the funds i.e. how much is exposed to which markets around the world, and which currency to hold them in. So far so good.We have been running our portfolios for over 8 years and are above the benchmark over every year for our popular cautious and average risk portfolios.
Performance is only a part of a plan, and in many cases is a small part. It can, however, make quite a difference to a plan over a long period of time.
Holding some funds in a cash investment may be the right thing to do, but not considering the alternatives always seems a waste to me – even if you do not personally need the extra money.
I therefore suggest if you have cash saved in one of the investment types mentioned in the first sentence, you speak to a financial adviser about the alternatives.
I put a lot of focus on qualifications, so as well as checking the advisers qualifications, in financial planning APFS and/ or CFP, look for a chartered investment managers qualification or at least IMC.
The adviser should hopefully be having specialists manage your funds, rather than do so themselves in my opinion, but they should understand what is being done and why.
Should you require financial assistance for pensions, savings, investments, mortgages, protection, long term care, employee benefits... contact the team at Beacon Wealth Management Ltd.
Tel: 01480 869466
The Old Chapel, Thrapston Road,
Kimbolton, Cambridgeshire, PE28 0HW