Investment: Britons urged to rebalance their portfolio – ‘you could do really well’ | Personal Finance | Finance

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Investment is being posed as potentially one of the best options for Britons at present due to shockingly low interest rates, and a lack of options available on the market. While investment does come with some level of risk, it could prove particularly advantageous for people, and many are now actively considering the option. However, for those who do have investments, there is a particular approach which is recommended to ensure funds are carefully managed and meet a person’s goals. 

Mr Norton continued: “You should be looking at your investments on a periodic basis, as you could do really well by carefully managing your portfolio.

“When you put your portfolio together, you’ll have equities which drive the investments – the high risk part.

“You’ll then have bonds which are more deliberately boring – which isn’t bad when it comes to investing. This will dampen your volatile when equities are not performing.

“If equities do really well, then your percentage in these will go up, and if you leave it unchecked, these will keep going up in the long run.

“But that would mean your proportion in bonds will fall, meaning as you get older, the risk of investments is probably getting higher.

“This isn’t something you want, as you’ll either want to keep your risk steady, or reduce the risk over time.”

Mr Norton highlighted that while a management of risk is important, managing a portfolio can often mean making changes.

While these changes do not have to be radical or frequent, considering how an investment portfolio is performing is key. 

He added: “See if your equities are at the right amount of risk to how you’ve set it up. If they aren’t, sell some of them to get the risk where you want it to be.

“Likewise, if equities are performing badly, and stock markets are falling, we’d propose people buy more equities.

“This can be a really difficult thing to do, particularly if we’re in a time where stock markets fall hard and fast, such as the case was at the start of the pandemic.

“But when the markets return round, again, you could do really well. Get your equities back up to benefit from the bounce.”

Once Britons understand how to put these tips into action it is likely they will feel more confident about managing their money in the long term.

Indeed, a level of both confidence and comfort seems to be the correct balance to strike when managing investments.

Mr Norton concluded: “Having this method in place to review your investment portfolio can be really helpful. If you haven’t done so recently, do it as soon as possible. Then you can review quarterly or yearly, for example. 

“Have very strict rules in place and stick to them no matter what – that’s the discipline, and that’s what a rebalancing perspective will provide.

“If you have rules written down, you have a plan for if the market does this, that or other – but through it all you’ll have an idea of what you want to do.

“Goals, balance, cost and discipline will do the job of taking the emotion out of investing and will ensure you don’t make rash decisions.”

Research tends to support the view posed by Mr Norton, with the Money Advice Service providing a strict warning to Britons.

Its website reads: “Investors who watch their investments day to day tend to buy and sell too often and get poor returns than investors who leave their money to grow for the long term.”

As such, those who are investing are encouraged to leave their money to ride out any fluctuations.

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