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Building and protecting your wealth

Diversify Your Investment Portfolio

Both NHS and private practice doctors and dentists likely have an investment portfolio – but do you know if you have the right mix of investments? Diversification helps you navigate the often turbulent waters of investing. Anything that can minimise your exposure to market volatility is a good thing, so find out more about why you should be spreading your savings and investments.

This does not constitute advice and advice should be sought in all instances before acting on it.

Diversification helps uncertainty

Combining a number of different investments maximises the performance of your portfolio. Your portfolio manager will actively change the mix of assets to be successful in the current market conditions. You can change the overall asset mix, the target markets within each asset class, and/or the risk profile of underlying funds within markets when you’re looking to make changes.

Within the asset classes, your manager might decide to be more aggressive when the markets are doing well and exercise caution when they aren’t. Other factors such as local economic growth, interest rates, and the political landscape will also impact your asset mix.

In general, most people adopt a more defensive strategy when risk appetite is low. On the other hand, your strategy might shift to economically sensitive parts of the market and to smaller companies when risk appetite is abundant.

Asset allocation

‘Asset allocation’ refers to how you decide to spread your money across the different asset classes and how much you want to hold in each. You can come up with any number of combinations, but cash will always be your starting point.

Asset classes:

  • Cash – savings accounts and money market funds.
  • Bonds – essentially, IOUs issued by governments or companies.
  • Equities – shares in companies.
  • Property – usually commercial real estate.

A number of factors will contribute to your asset allocation selection: your future capital or income needs, the deadline when those capital sums will be needed or how long it will take to get the income needed, and your attitude toward risk.

Luckily, asset allocation naturally spreads the risk across different classes, so if your comfort level with risk is shaky, this will help. Investments will go up and down, that’s just the nature of the beast, but by diversifying your investment portfolio, you’re doing all you can to achieve the returns you need to meet your goals.

Evolving attitude toward risk

The possible returns from the different kinds of investment, and the risks involved to get those favourable returns, will change over time. This is due to economic, political, and regulatory changes, and many other factors.

Your attitude towards risk will also evolve over time. Young medical and dental professionals, at the beginning of their investment journey might not worry about a temporary fall in activity as they have time to see things pick up again. However, investors with more responsibilities and loftier goals might have a more conservative strategy.

Ready to diversify?

As a busy dental or medical professional, it can be hard to find the time to sit down and manage your investments. Getting professional advice for your investment decisions can be hugely beneficial – now and in the future. Identify which investment options are right for your individual circumstances or to find out more, please contact us – we look forward to hearing from you.

Is it time to review your investment plan?
Investments | Financial Planning | Retirement | Save Tax | Protection |

Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
Call Darren to discuss your options.

Tel: 01403 780 770


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