Investing for the first time can be a daunting prospect. Fear of losing money, lack of knowledge or confidence with the investment choices that are available and suitable for individual requirements can often stop people making the shift from saving to investing. Frank Atkins, Investment Director, Head of Multi-Asset at Brooks Macdonald, explores the role that multi-asset funds can often play in helping first time investors achieve their goals with clarity.
First time investors are generally more risk-aware and may prefer to save rather than invest, prefer safer investments, or delay investing altogether due to fear of losses. All investors have concerns when making investment decisions, however delaying investing can limit wealth-building over the long term and reduce financial independence.
Recent findings by the Department of Work and Pensions (DWP) highlight just how important investing for future wealth is. The Pensions Commission is to be revived following findings that 4 in 10 people are undersaving for retirement. Investing is one of the most effective ways to ensure you have the available resources to support yourself throughout your retirement years and retirement planning is crucial for investing in future wealth and future peace of mind. This means that getting the right advice and planning for retirement is especially important. Investing is also the means by which people can reach their financial goals throughout the various life stages. Whether buying a home, funding an education or retiring early, investing is how many people become wealthy over time.
A series of major Financial Conduct Authority (FCA) regulatory reforms are focused on encouraging more people to start investing in UK capital markets. Targeted support and simplified advice will aim to help savers receive guidance and feel more confident with investing rather than holding cash.
Investing for long-term goals should be encouraged, not least because inflation erodes the real value of your money over time, making it worth less in the future than it is worth today. One of the most significant benefits of investing is the power of compound return and the earlier you start, the more time your money has to grow, and small investments made now can lead to considerable benefits over the long term.
At Brooks Macdonald, we encourage investors to take control of their finances. We provide support at every stage of the investment journey with personalised plans, expert advice and investment products to meet every client need.
We believe that multi-asset funds are an investment vehicle which can have a clear role to play in helping first time investors achieve their financial and lifestyle goals, and with the correct guidance they can do so with confidence and clarity.
Why multi-asset funds can be a good choice for first time investors
IFA Magazine’s Multi-Asset Insights reader survey reported that 89% of advisers polled are recommending multi-asset funds to clients, which shows that this type of investment fund is liked and trusted.
Multi-asset funds can provide flexible solutions for investors and the 30% growth in assets under management in multi-asset strategies in recent years demonstrates how these products address investor needs against an economic backdrop of shifting risks, opportunities and regulatory demands. (Source: IFA Magazine, Multi-Asset Fund Insights).
Risk-averse investors tend to have a stronger preference for capital preservation over high investment returns. Whilst no investment strategy can eliminate all risk, diversification and risk management are two of the main reasons cited by advisers in response to the IFA Magazine’s survey for the popularity of multi-asset funds. Multiple, uncorrelated return streams reduce a portfolio’s volatility and diversification by asset class and geography helps portfolios remain dynamic and resilient amid shifting and volatile market conditions.
First time investors shouldn’t be put off by the risks involved with investing. Understanding personal risk tolerance is essential for selecting an investment portfolio that reflects individual comfort level with risk and balancing it against the potential for returns. An investment manager like Brooks Macdonald can help create a plan that ensures investment goals and choices are shaped by individual risk levels.
Brooks Macdonald’s Blueprint Multi-Asset fund solutions are globally diversified funds offering actively managed investment solutions, designed to suit a variety of risk profiles and life stages. The funds are managed in line with specific investment goals, providing solutions for both long term growth and income generation which can provide first time investors with the confidence to begin investing, or to take a longer-term approach to investing.
Across Brooks Macdonald we’re proud to provide tailored and trusted financial advice to clients, with the aim to invest with confidence for their financial futures.
Important information
The information in this document does not constitute advice or a recommendation and you should not make any investment decisions on the basis of it. Investors should be aware that the price of investments and the income from them can go down as well as up and that neither is guaranteed. Investors may not get back the amount invested. Past performance is not a reliable indicator of future results.
About Frank Atkins, Investment Director, Multi-Asset Team Head
Frank joined Brooks Macdonald in 2010 and co-manages our Managed Portfolio Service and Multi-Asset Fund range. Prior to joining Brooks Macdonald, Frank worked at Barclays Wealth. He has more than 15 years’ experience in financial services. Frank holds the Investment Management Certificate (IMC) and the Certificate in Private Client Investment Advice & Management (PCIAM).
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