The current allocation of US equities (£99,000) is already well-suited for a growth strategy. The US market has the potential to expand beyond its AI foundation, making it an excellent source for capital growth in portfolios.
To enhance diversification within Mr. Hudson’s equity holdings, a range of fund styles should be utilized, including “growth” (for fast-growing companies), “value” (for undervalued gems), and passive (for tracker funds).
Diversification within the equity class is crucial given the ongoing economic uncertainty. Incorporating various investment strategies in the equity holdings will help achieve this.
Funds should be preferred over individual shares to ensure diversification within the portfolio.
The current level of fixed-income assets (around 10%) in the portfolio is appropriate for a growth strategy. However, it is advisable to have significant exposure to government bonds, which are currently yielding above expected inflation rates.
Considering the susceptibility of corporate bonds to economic slowdown, it is recommended to opt for short duration bond-exposure where possible as a lower risk option.
Given the prevailing economic uncertainty, it is advisable to include some gold exposure in the portfolio. While gold is a non-yielding asset, it serves as a valuable defensive counterweight to equities since its value is not correlated with the stock market.
Daniel Wood, financial planning director at 7IM, suggests:
Mr. Hudson and his wife are in a situation that many people find themselves in – they want to maximize their investment growth. The key difference here is the investment time horizon.
Despite Mr. Hudson’s belief that they are too old to invest for another 10 years and that they only plan to invest for a maximum of five years, according to the Office of National Statistics, Rory has a life expectancy of 87 and his wife is aged 89. Barring any health-related concerns, both individuals could have a 13-year investment time horizon.
Understanding the investment time horizon, income needs, and capital requirements is crucial in determining Mr. Hudson and his wife’s risk tolerance, ability to take risks, and capacity for loss.
Subsequently, the appropriate investment strategy and potential for capital growth can be determined.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
