How can I protect my investments from market changes?

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Ask the expert at Smith & Pinching about portfolio management and investment strategy - Credit: Getty Images/iStockphoto

I’ve had my investment portfolio for about five years now, but I’m concerned that it’s not giving me reliable returns. Values have been going up and down a lot over the past couple of years. I don’t have the time to keep making changes to the portfolio when values start to drop and I think I’d end up losing money if I didn’t react quickly enough. What can I do to protect myself?

Matthew Hinchliffe, Independent Financial Adviser with Smith & Pinching 

Matthew Hinchliffe, Independent Financial Adviser with Smith & Pinching - Credit: Smith & Pinching

Matthew Hinchliffe of Smith & Pinching responds:

Firstly, it is important to remember that investing should be seen as a long-term process. You must accept that there will be times when values fall quickly – and you should understand that sharp falls are often followed by significant recovery. What’s important is that you make gradual gains over the long haul.

However, that doesn’t mean that you can’t take measures to mitigate falls in the market and changing investment trends. I strongly recommend that you review your portfolio at least once a year to make sure that its underlying investments are on track to meet your objectives. An independent financial adviser will help ensure that the investment assets you hold are suitable for you in terms of your attitude to investment risk and your investment preferences.

For a more proactive approach, you can take advantage of ongoing portfolio management. This is a service offered by many financial advice firms and involves giving an investment manager the authority to make changes to your portfolio on a regular basis, without referring back to you each time. Some advice firms provide this service via a third-party management company whereas others, such as Smith & Pinching, will have their own investment experts and will provide the service as part of their central investment proposition.

Portfolio management can be offered using model portfolios of investments. These are standard portfolios that will hold a range of investments that are matched to a specific level of risk. They can also reflect investment preferences, such as ethical investments. The contents of a standard portfolio can be adjusted as markets change, but they will always keep within the agreed parameters for the overall portfolio.

Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

For more information, please visit www.smith-pinching.co.uk