February 2025: How To Be Happy With Your Investments – The First Steps

As financial planners, the first question we’re often asked is how investments will perform, for example:

“Which investment will provide the best returns?”

or

“How do you think the market will react to the upcoming budget or election?”

Although these are perfectly reasonable questions, it’s far more enlightening to focus on identifying what it is you’d like to save or invest for.

Figuring out the answer to this defines the purpose of your money and lays the foundation for smart financial planning. It’s a crucial first step and gives you the ability to achieve long-term peace of mind about your investments.

Are you looking for income, long-term investment growth, cash for a holiday in a few years, or boosting your retirement funds?

All these goals are likely to require not only different forms of investment - for example savings accounts, ISAs, bonds and pensions - but can also indicate what level of investment risk you are likely to be comfortable with.

The Pitfalls of Aimless Investing

Investing without a clear goal is like embarking on a road trip without a destination in mind. You might encounter some interesting sights along the way, but you will likely waste time, money and energy making haphazard turns.

When you don't know the purpose of your money, your investment approach can quickly dissolve into a jumble of impulsive decisions, trend-chasing and knee-jerk reactions to market noise.

If you are saving for retirement decades down the line, it’s worth reflecting on whether you should be concerned about daily market fluctuations. Investing for the long term allows your funds sufficient time for growth.

Conversely, if you're investing money for a known expense next year, a portfolio designed for long-term investors is unlikely to help you.

As a reminder, this is what stock market returns have been over the last month and 30 years.

Making An Impact

I was recently asked by a client to speak to their 22-year-old daughter who wanted to start investing some money. She was keen to know all about investment returns, dividends, trading accounts, pensions and ISAs, and had obviously been doing some research.

The key, however, was to find out what the money was for. It transpired during our call that she was keen to go travelling within the next two or three years, so longer-term investments like equity ISAs or pensions were never going to be the right solution. She ended up very happily moving her money into a high-interest-rate cash ISA.

Skipping this essential step of defining your money's purpose can often lead to emotional decision-making based on social media posts or how the media are reporting the latest crisis in the world.

The consequences?

Missed opportunities, undue stress and a lack of confidence in your financial future.

Your Trusted Expert on the Investment Journey

Successful investing doesn't have to be complicated.

It begins with asking the right questions. So, whenever you consider an investment, we encourage you to first clarify exactly what it is you want.

We understand that translating goals into an investment strategy can seem daunting, especially with the complexities of today's financial markets, the options available and the constant changes in legislation.

That's where a specialist financial adviser comes in. We help you refine your goals and craft a tailored investment plan to achieve them. We aim to bring clarity and expertise to the process so you can focus on other important areas of your life.

Investing is not about chasing the latest trends or finding some elusive "perfect" strategy. It's about leveraging your money as a tool to build the future you desire.

Quote

"It’s good to have money and the things that money can buy, but it’s good, too, to check up once in a while and make sure that you haven’t lost the things that money can’t buy."

George Lorimer

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As always, we’re here to help you.