key factors you can control when investing

The Four Key Factors You Can Control When Investing

There’s a lot to consider when structuring your investments to ensure you grow your wealth effectively and achieve your financial goals.

But controlling four key factors you can control when investing gives you a meaningfully higher chance of a successful financial outcome:

1. The fees you pay for investing

One crucial thing you can control when investing is the amount you pay in fees.

When you’re charged investment fees, it’s easy to see these as minimal when compared to the value of your overall portfolio. However, even paying 1% a year more than you need to can quickly add up and make a big difference to your outcome over time.

Many investors assume a more expensive investment fee will result in a higher potential for returns, but this isn’t always the case. In fact, active managers (who typically charge more than those who track an index) are proven to generally lag behind when it comes to performance.

Instead, you could place your investments in the hands of an expert modern wealth manager that offers competitive fees, which are not only clear, but more sustainable.

This will result in you receiving expert wealth management advice and optimised investment strategies, all for fees which are best suited to your financial circumstances.

2. Your investments in tax wrappers

Another important thing to control when investing is how well you optimise your investments held within a tax wrapper.

These are specific types of accounts that allow you to shelter a certain amount of your money from tax.

An example of a popular tax wrapper is an individual savings account (ISA). By investing in this account, you can shelter a portion of your money from tax each year, and depending on the ISA you open, you can even shelter your investment growth from tax also.

As of the current tax year, there’s a £20,000 annual allowance on ISAs so you can only invest up to this amount tax free each year in your ISAs.

By distributing your investments more strategically into tax wrappers – which also include pensions – you can continue to build your wealth effectively and shelter your money and growth from potential tax charges.

3. How you diversify your portfolio

You can also control how you diversify your investment portfolios – a vital way to optimise your investments and help you reach your financial goals.

Your financial adviser’s insights could be very valuable, on the types of investments you can make to ensure they’re best suited to growing your finances.

They’ll help you choose portfolios with the right balance of risk and potential returns, and which align as much as possible with your current financial circumstances.

Also, if you have any personal investor values, your adviser will make sure these are reflected in all the investment opportunities you explore – for example, socially responsible investing (SRI).

4. Your time in the markets

Another aspect of your investments which you can, and should control, is your exposure to the markets.

One of the trickiest yet most essential parts of your investment strategy, is knowing how much time to spend invested in the market.

For example, it can be easy to react to certain news or events, as this is something many investors are prone to. However, this is again why you need an expert adviser to guide you in these instances, as they’ll likely inform you that overall time spent in the market can be more beneficial than specific timing.

Timing when to be in or out of the markets is often highly complex, and can end up being costly. However, simply staying invested can have a range of benefits, and have a higher chance of producing a successful outcome.

With these four key factors as your foundation, make sure you and your financial adviser create the best plan to optimise your investments, and secure the best financial outcome for you.

Please note, the value of your investments can go down as well as up.

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