Guest Blog: Investing: Planning for your future post-COVID 19
by KLO Financial Services
The coronavirus pandemic has left many people feeling uncertain about the future, and with increased anxieties surrounding financial instability, many people are looking for alternative ways to ensure that their finances are as healthy as possible.
In this exclusive guest blog, our partner KLO Financial Services outlines how businesses and individuals can efficiently plan for their future as we slowly begin to return to normal after the pandemic.
Planning for your future as a business
Over the past few months, many businesses have been affected by the coronavirus outbreak, as we begin to exit isolation, now is the time to consider what changes need to be made in the running of your business, to protect your sales pipeline and to future-proof your business, should anything like this happen again.
One of the best ways to determine the issues within your company is to seek expert advice from a management consultant. A consultant works closely alongside you to understand your financial needs, so they can provide solutions that ensure your business is running at full capacity, whilst keeping you financially stable and comfortable for years to come.
Planning for your future as an individual
As an individual safeguarding your money has never been more important, and although saving is a valuable life skill, in today’s economic climate, it’s not powerful enough by itself.
More and more individuals have been turning to investments to help grow their personal capital as investments are a great way to protect the time value of money and can be used to plan or achieve medium to long-term goals.
What is an investment?
Investing is the act of using your money to purchase an asset with the goal of earning income or capital appreciation.
People invest for many reasons:
The main goal of investing is to earn income or to increase capital, although there are no guarantees.
What are the main investment vehicles?
With a wide range of investment vehicles available, knowing which investment is right for you can at first seem very confusing. On the most basic level, there are four main asset classes.
A share (also known as stock or equities) represents a stake or part ownership in a company that is listed on a stock exchange. Your investment will grow or fall as the value of the company increases or decreases.
- Bonds and gilts
When you invest in bonds, you are essentially loaning the money to a company (corporate bonds) or to the government (gilts). The issuer pays you a set amount of interest each year and will repay the total of your investment, on the redemption date agreed by both parties.
There are two main types of property investment, direct and indirect. Direct property investment allows you to receive regular income in the form of rent. You can also invest indirectly in a property fund. If the fund performs successfully it will provide an income in the form of dividends, or rental income.
A cash asset describes any cash you have on your person, or in a bank or building society.
With any of the investments mentioned above, you can also invest as part of a group across a range of assets. A fund manager usually controls these pooled investments.
What is investment risk?
Investment risk is defined as the chance that the overall outcome differs from the expected return on investment, including the possibility of losing some or all of the original investment.
Risk is a fundamental part of investing money and the risk/reward trade-off plays a big part in investing. The greater the risk you take with your money, the bigger the potential reward. The safer the risk you take, the lower the return is likely to be.
Risks are typically split into three categories: High, medium and low risk.
- High risk
A high-risk investor is prepared to accept that they could lose a significant part of their investment. A high-risk investor would want to achieve the biggest return on investment possible and may put a large proportion of capital into stocks and share, as although unstable, has the potential for the greatest reward. Investments are likely to fluctuate more significantly over short periods of time.
- Medium Risk
A medium-risk investor is prepared to accept that investments fluctuate. A medium-risk investor is more likely to have a diversified investment portfolio that contains some or all of the four main vehicles, with the aim of achieving a higher return on investment long term.
- Low risk
A low-risk investor is not prepared to risk investment loss. A low-risk investment is typically the investment of cash or government bonds that provide a regular income or capital preservation rather than building capital.
The amount of risk you should take with your investment is personal and will depend on many different factors, but should ultimately come down to how much you feel you could afford to lose if the worst were to happen.
If you are looking to gain more from your investments and prepare for your future, you might want to consider hiring a financial planner to help you achieve your goals.
Who are KLO Financial Services?
KLO Financial Services are a team of independent financial advisers and client managers, with offices in Warwick, Birmingham and London. KLO Financial Services combine an innovative, client-focused philosophy with all the strengths of a traditional personalised service, and pride themselves on their core values of integrity, quality and tailored advice.
The financial planners at KLO can help you across a portfolio of services, including, but not limited to:
- The need for adequate family protection in the event of death or ill health;
- Retirement planning;
- The tax efficient investment of capital for growth or income;
- Saving for long term goals;
- Mitigation of tax liabilities, including inheritance tax.
To find out more about investing or to speak to one of our trained financial planning advisors, call us today on 01926 492406.