Creating a high-performing investment portfolio is one thing – making sure it stays that way, quite another. The reality is that markets change, currencies fluctuate, risk appetites evolve, and your circumstances vary.
It’s never enough to create a portfolio with good returns if you aren’t confident that you have the resources to adjust those investments when needs be.
Here are our six tips to ensure your portfolio continues performing, and some signs that it’s time to revisit your investment structures sooner rather than later.
1. Don’t Overlook the Value of a Portfolio Review
We’ve highlighted before the crucial importance of a portfolio review, and it’s an essential part of ensuring your investments don’t hit a plateau.
As specialists in expat investment management, the Chase Buchanan teams regularly take on new portfolios. We often identify potential pitfalls or slowing investment returns; both red flags that there are more advantageous options out there.
The first step to steering well clear of the dreaded plateau is to conduct periodic reviews. If everything is running to plan, that’s great. If not, you’ve taken a proactive approach to analysing how beneficial your existing investments are, giving you the capacity to adjust as required to sidestep any products that aren’t keeping pace.
2. Be Conscious of Global Events
Post-Brexit and post-pandemic trading are in a period of flux. It’s essential for UK expats, whether resident in the EU or elsewhere, to be conscious about the changes likely to affect your portfolio in light of these significant events.
Therefore, it’s a great time to consider:
- Whether existing cross-currency investments still present good value?
- If your retirement plans have altered following the UK’s EU departure?
- How your appetite for risk exposure might have changed in the last year?
While many investors focus on the bottom line or presume that their affairs are in good order, it’s vital to look at the bigger picture to ensure you don’t hit a roadblock. For example, market predictions are considerably different for 2022 than just 12 short months ago, and so a long-term investment plan may be worthwhile revisiting now.
Likewise, several new opportunities are appearing, particularly as countries scramble to rework their visa requirements and investment opportunities to attract foreign nationals to shore up beleaguered economies.
Keeping one eye on the broader global climate is a great way to pinpoint exciting new ventures that may be substantially more appealing than your existing investment products.
3. Know What You’re Paying for Investment Management
If you’re concerned about decreasing returns, it might be easy to assume that they’re due to portfolio performance. However, it’s also essential to consider whether you are paying too much in fees.
Investment portfolio fees vary considerably, and much depends on the types of products you own and how involved your asset manager is in proactively identifying opportunities to diversify.
Chase Buchanan offers a professional portfolio review service, looking at a range of factors:
- Your overall management costs, including ‘hidden’ fees.
- Recommendations for more cost-efficient management strategies.
- Comparisons between your existing charges and the opportunity to boost portfolio income by managing that outlay.
To schedule a portfolio review, please get in touch with your nearest Chase Buchanan office.
4. Reassess Your Risk Exposure and Comfort
One of the most common drivers behind a portfolio plateau is that it has been left to run at the same risk vs return balance for months – or even years – at a time.
Every investment has a risk element. It must align with your risk appetite and willingness to expose your assets to potential losses in return for prospective returns far higher than those elsewhere.
It’s essential to revisit your risk level, usually every year, and look at:
- Whether you could increase your risk level to outpace inflation levels?
- How controlled your risks are, and how to blend lower-risk products to mitigate exposure?
When plans change, your investment portfolio should, too – opting for the lowest risk options can seem a prudent choice. However, it may result in overall long-term losses when you factor in inflation, as the associated small returns aren’t sufficient to maintain momentum.
5. Take Advantage of Diversification Safeguards
Diversifying investments is a catchphrase we hear all the time – and it’s an essential element of managing your portfolio. We’ve talked about risk, and diversifying is an excellent way to limit that and avoid concentrating all of your investments in one country or sector.
Again, there is a need to balance exposure and returns, weighing up how well balanced your portfolio is – to meet your expectations, avoid slowing to a plateau, and prevent sudden losses due to a high concentration in one area.
Learn more about Why Investment Diversification Matters in our online publication.
6. Remember to Incorporate Professional Tax Planning
Finally, it’s impossible to ignore taxation when looking at ways to keep a healthy portfolio moving in the right direction. Tax planning is an integral part of any solid investment strategy – and will also require a revisit following a tumultuous year.
There are some sizeable changes to tax levies and allowances, particularly for UK expats living in the EU. Many foreign nationals are instantly bumping over to a new tax bracket as non-EU citizens.
Tax efficiencies aren’t only a way to review the returns on your investments and avoid paying excessive taxes unnecessarily but are also a crucial component of succession planning. A tax-efficient income structure is ideal for avoiding a plateau or finding that your hard-earned returns will diminish when those assets pass to beneficiaries.
Cross border taxes are still changing as the world settles into new ways of working. With offices in Cyprus, Portugal, Spain, Belgium, Canada and the USA, along with our UK Administration centre, Chase Buchanan provides expert taxation advice to ensure your investments are suitably protected.