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Fortitude Financial Planning

How to choose wisely when investing?

Posted: 28/09/21 by Fortitude Financial Planning

On a scale of one to ten, how comfortable are you with the idea of investing? Whilst it will almost certainly feel riskier than money in the bank, holding cash carries its own risks. With interest rates still at historical lows and inflation on the rise, it’s unlikely that savings will outpace the cost of living over the longer term. The best chance of achieving that today generally means turning to investments.

Wherever your comfort zone is when investing, you’ll want reassurance that your money is in the safest hands possible. It’s only natural that if you choose to invest with Fortitude, you’ll want to know more about how we do things. So, here’s a general overview of our investment philosophy and processes.

A robust and disciplined approach
We go above and beyond to select the most suitable portfolios for our clients – and ensure they’re still right in the years to come.

Our investment philosophy is our ‘North Star’, guiding everything we do in this space. Based on extensive research, empirical evidence and years of experience, it means you can have confidence that our investment decisions are well-considered and sensible. You can also rest assured that we’ve used the most sophisticated tools to test our investment solutions fully.

As we’re independent, we’re able to scour the whole of the market for investment fund opportunities. But with thousands of funds out there, where are you supposed to start? Well, for us, it starts with you.

Part of the wider plan
Before we even think about selecting suitable investments, it’s vital for us to understand your needs, goals and attitude to risk. We believe investment decisions should only be made in the context of a wider financial plan, which is why we take time to get to know you during our initial meetings. Doing this enables us to pinpoint the risk/return balance you need in order to achieve your lifestyle goals and maintain financial independence in a way that still lets you sleep at night.

Once we have a clear view of your current situation, income needs, goals and risk tolerance, we can start to build a suitable investment portfolio to match.

Choosing suitable funds
What are the factors we look for when selecting investment funds? Well, there are quite a few! Our screening process includes a long list of well-defined criteria, but here’s a selection of some key considerations.

- Costs – let’s start with the obvious. While the initial and annual charges are the most important, there’ll also be costs associated with owning the fund over time – such as when buying or selling shares – that eat into your returns. It’s our aim to keep costs as low as possible for you so you can enjoy more in your pocket at the end of the day.

- Fund size – with greater assets under management comes an increase in economies of scale, efficiencies and liquidity. That’s why we aim for fund sizes of over £100m.

- Provider strength and commitment – we’re looking for providers who offer the financial security and commitment to the market to be long-term players. No fly-by-night operators allowed.

- A long-term strategy (or ‘passive intent’) – we favour funds that ‘buy and hold’ assets rather than try to time the market. We recognise that this patient approach provides more stable and effective results over the longer term.

- Transparency – we only select funds that have a transparent charging structure – nasty surprises aren’t welcome here.

- Environmental, social and governance (ESG) standards – we’ll look closely at the ESG credentials such as standards relating to pollution, water-intensity of operations, and gender equality, among other factors.

- Platform availability – with any fund, we must be able to trade it cost-effectively and efficiently, so we only invest in those widely available on main adviser platforms.

A long-term, diversified approach
Unless you’re seriously into number-crunching, the full mechanics of our fund selection may not be straightforward, and it certainly doesn’t make for light reading! It’s our job to do the hard work behind the scenes so you don’t have to, enabling you to make informed decisions about your money so you can aim for the lifestyle you want while enjoying financial peace of mind.

While we look at everyone individually to ensure our recommendations are suitable on a client-by-client basis, the key principles behind our investment philosophy remain consistent. We believe that building a well-diversified portfolio, investing for the long term, and sticking to a strategy with patience and resolve is the best approach.

If you’d like to know more about why we’re a wise choice as an investment partner, get in touch.

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