Building a Balanced Savings Portfolio
If you are looking to building a balanced portfolio,
it is important to take all your finances into account. For example, if half of your money is in bank and building society accounts, you may be able to take more risk with the other half.
A typical portfolio structure might be:
Short Term
Low Risk |
Medium Term
Low-Medium Risk |
Long Term
High Risk |
|
| Bank accounts |
Investment Fund types:
Cautious Managed
Gilts
Fixed Interest
Distribution
Equity Income
Property
|
Investment Fund types:
Stock-market Managed
European
Equity Growth
Global Growth
Specialist
Smaller Companies
Emerging Markets
Technology and Telecoms
Individual company shares |
| Now |
5 Years |
10 Years or more |
The short-term money may be held in instant or notice accounts, fixed for a set period, direct or through cash ISAs (Individual Savings Accounts). Don’t forget to take account of tax considerations, so that your portfolio can be set up in the most efficient way.
Medium and long-term money can be in ISAs, unit trusts, investment bonds, pension plans, endowments and other ‘wrappers’. For simplicity, you may not want too many separate things, as the paperwork can really build up. Ease of getting valuations may also be important. You should feel that you are in control of your money.
Don’t forget that investments for your children or grandchildren could be for several years, even if your own time-frame is shorter.
I have not tried to cover every possible type of investment, just some of the most common. The proportions within each section are likely to be different for each person.
You will need to think about how much risk you are comfortable with, and remember that generally the higher the risk, the more the potential reward. There is nothing which has absolutely no risk – and if there were, you probably wouldn’t be happy with the return.
No investment decision should be taken based on the content of this site. Always take full individual advice first. The regulations governing tax and rates and investments may change in the future.
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