A Financial Plan is not Plain Sailing

Embarking on a financial plan is like sailing around the world. The voyage won’t always go to plan and there’ll be rough seas, but those who are prepared, flexible, patient and well-advised greatly increase the odds of reaching their destination.

A mistake many inexperienced sailors make is not having a plan at all. They embark without a clear sense of their destination and once they do decide, they often find themselves lost at sea in the wrong boat with inadequate provisions.

Likewise, in planning an investment journey, you need to decide on your goal. A first step might be to consider whether the goal is realistic and achievable. For instance, while you may long to retire in the south of France, you may not be prepared to sacrifice your needs today to satisfy that distant desire.

Once you are set on a realistic destination, you need to ensure you have the right portfolio to get you there.

  • Have you planned for multiple contingencies?
  • What degree of ‘bad weather’ can your plan withstand along the way?

Key to a successful voyage is a good navigator. A trusted adviser is like that, regularly taking coordinates and making adjustments, if necessary. If your circumstances change, the adviser may suggest you replot your course.

As with the weather at sea, markets can be unpredictable. A sudden squall can whip up waves of volatility, tides can shift and strong currents can threaten to blow you off course. Like a seasoned sailor, an experienced adviser will work with the conditions.

Once the storm passes, you can pick up speed again. Just as a sturdy vessel will help you withstand most conditions at sea, a well diversified portfolio can act as a bulwark against the sometimes tempestuous conditions in markets.

Circumventing the globe is not exciting every day. Patience is required with local customs and paperwork as you pull into different ports. Likewise, a lack of attention to costs and taxes are the enemy of many a long-term financial plan.

Distractions can also send investors, like sailors, off course. In the face of ‘hot’ investment trends, it takes discipline not to veer from your chosen plan. Like the sirens of Greek mythology, media pundits can also be diverting, tempting you to change tack and act on news that is already priced in to markets.

A lack of flexibility is another impediment to a successful investment journey. If it doesn’t look like you’ll make your destination in time, you may have to extend your voyage, take a different route to get there or even moderate your goal. The important point is that you become comfortable with the idea that uncertainty is inherent to the investment journey, just as it is with any sea voyage.

That is why preparation and planning are so critical. While you can’t control every outcome, you can be prepared for the range of possibilities and understand that you have clear choices if things don’t go according to plan.

If you can’t live with the volatility, you can change your plan. If the goal looks unachievable, you can lower your sights. If it doesn’t look like you’ll arrive on time, you can extend your journey.

Of course, not everyone’s journey is the same. Neither is everyone’s destination. We take different routes to different places and we meet a range of challenges and opportunities along the way.

But for all of us, it’s critical that we are prepared for our journeys in the right vessel, that we keep our destinations in mind, that we stick with the plans, and that we have a trusted navigator to chart our courses and keep us on target.

The US election: the one thing we can be sure about is uncertainty


We are somewhat loathe to put out yet another piece about what might happen in the markets, as it risks focusing long-term, sensible investors’ minds on short-term events. The referendum on Scottish independence, Grexit, China’s slowdown and most recently Brexit, have come and gone, in market terms, with most investors sitting on healthy increases in their portfolios since 2014, despite uncertainty at the time. However, it is not a bad thing to revisit the robust rationale for the structure of our client portfolios, particularly at such a time.

A Wine Lover’s Guide to Investing


I have no doubt that if you are like me you will have sampled some nice wine over the years. For me, vintage wine is one of life’s great pleasures. But often overlooked in the joy of consumption is the carefully calibrated journey from grape to glass. Similar levels of care are critical to good investment outcomes.

When loss is a good thing!


Loss is often associated with negative connotations. When we think about losing something, we think about people, money, our jobs, precious items, even hours in a day; all things we can’t easily get back. Indeed, if you were to look up the word ‘loss’ in a dictionary you would find words such as, detriment, disadvantage and deprivation. But is loss always a bad thing?

What rich parents need to tell their kids


Carpenter Rees has worked with many families and family businesses over the years, and I have recently read a great series of blogs from Sandy Loder (www.ahloderadvisers.com), who has a great deal of experience in helping his clients through succession and development of the next generation.

Modern Portfolio Theory: The Efficient Frontier


Almost 26 years ago, Professor Harry Markowitz was awarded the Nobel Prize for his pioneering work in financial economics. Markowitz developed a model for understanding portfolio allocation under uncertainty, which has endured as Modern Portfolio Theory. Clearly this is not quite so modern today but it has withstood the test of time. By urging investors not to focus solely on returns of individual stocks but to also consider the concept of risk exposure, Markowitz changed the way people invest. Today, trillions of pounds are invested, including our own client’s funds, according to his principles of risk and return.

Gone Phishing!


Up until a few years ago, if I’d mentioned the word ‘phishing’, you might have assumed that I was talking about serene lakes, fishing rods and carp.

Finding Life’s Balance

There’s nothing quite like a summer holiday to ‘recharge the batteries’ and bring a little balance back to your life.

As you read this, I will hopefully be sunning myself on the beach or maybe even enjoying a nice lunch with a glass of vino!  I almost said I will be having a ‘restful time’, but as those of you with young children will know; children and restful are not words which often fall into the same sentence.