Understand your attitude to risk and return

Investing typically involves a trade-off between risk and reward. What factors affect risk tolerance? Your age, stage in life, personal temperament, fincial goals, planning time horizon and investment experience each play a role. You may be a cautious investor and are willing to accept a lower level of return for a high degree of capital security. On the other hand, you may be a more adventurous investor and are willing to accept a higher level of risk for the potential of a greater level of return. Or you may sit somewhere in between or want to spread your investments between a mix of cautious and higher risk funds. By selecting Spectrum Bond, you can be confident that no matter what your attitude to risk and return or what your preferred asset class or fund manager we have fund options to suit you.

Don't put all your eggs in one basket

We've all heard the old saying. The same can be said of you investment portfolio. Diversification is an investment technique that involves building a portfolio of funds that includes options both across and within different asset classes. Ideally, you would like to hold the top performing asset class each year, whether that's equities, bonds, cash or properties. However, as history has shown, there is no way of predicting what asset class will be the star performer each year. That is why diversification is key. By balancing risk and return through diversification, you can

• Participate in market gains
• Minimise the effect of market downturns on any one asset class
• Achieve more consistent and steadier returns over the long-term rather than 'chasing winners'
• Reduce the risk profile of your portfolio 

Don't ignore inflation 

Inflation is simply a measure of the increase in the price of goods and services in a region. Inflation can seriously erode the purchasing power of your investments. Investing in equity and property assets has historically provided the best insulation against the impact of inflation.

Take a long-term view 

Establishing financial goals and staying the course during market highs and lows can  help you achieve your investment goals. time, not timing, is the most important thing to consider when investing. Of course we would all like to sell when the market has peaked, just before the market moves downward and then get back into the market at the bottom, just before the recovery begins. However, getting this timing exactly right is near impossible, even for seasoned investors. Historically, markets have always recovered following periods of market decline to deliver strong long-term returns. To achieve your long-term financial goals, the best time to invest is as soon as possible so your money has plenty of time to grow.

Get advice from an expert

Financial advisers can provide many levels of assitance:

• Help you identify your financial needs and set short and long-term investment goals
• Assist you in builidng a portfolio of investments that meets your goals, objectives and risk tolerance
• Set realistic expectations for your portfolio by explaining the risk and rewards of each investment
• Monitor your portfolio and help you evaluate its performance
• Regularly review and adjust your portfolio to reflect changes in your financial needs and economic conditions