Making the most of your investment funds with Brightbridge Wealth Management

Making the most of your investment funds with Brightbridge Wealth Management

No matter where you put your savings, it's certain that you are losing money every day. Inflation is back on the increase meaning that prices are rising at a faster rate than even the best savings rates pay in interest.

If you want to keep up with the cost of living you have to cast your net wider than a savings account. So where can investors get some inflation protection in their portfolios?

Emerging markets

Investing in emerging markets is inherently risky, but with this comes far greater opportunity for growth. This usually means the emerging markets of the BRIC economies (Brazil, Russia, India and China). Despite the potential for political and economic instability, most experts agree that developing markets still offer potential for inflation-beating returns.

The long-term argument for them remains very much intact and good returns are predicted for 2011. At Brightbridge we look to offer our clients access to all markets and the Emerging Markets are no exception.

Commodities

Commodities are another asset class with a good track record of outperforming inflation, and growth in this sector is linked to the strength of emerging markets.

Gold is often touted as the best way to protect against inflation by holding its value when currencies are weak. Access to commodities can be gained easily through exchange traded funds (ETFs) which are low cost and track the price of each commodity. Investors can also gain through natural resources funds but as commodities can be volatile, we advise our clients to hold no more than 5 per cent in their portfolio.

Smaller companies

For those willing to take a bit of risk, smaller companies have greater potential to grow rapidly. Here, stock picking is critical, so stick to companies with good track records, strong management teams and solid financials. If ever you need an opinion or advice on a small company, Brightbridges advisors have access to research and analytical programs which are invaluable in making the right decision.

Direct share investment

One of the highest risk/reward investment approaches is to buy shares in a company in the hope that they will pay a good dividend and enjoy capital growth. Large blue-chip companies offer a degree of security. However, direct share investment is high risk and many investors prefer to go with a unit or investment trust fund where the manager invests your cash in lots of companies. This is not always the best route to making your portfolio stronger, however it affords the security of placing your investments in well known, multi-national companies.

Bonds

Ordinarily, bonds are the last place to turn when inflation is getting out of hand because it will usually drive interest rates up. As bonds mostly pay a fixed income, the price will then fall to compensate for higher interest rates. However, there are inflation linked bonds. The payoff is that the interest paid starts off at a much lower level than on conventional gilts but investors are protected by returns linked to RPI. Strategic bond funds are riskier than corporate bonds but more flexible as managers are given more freedom to hold and switch to different types of bond.

Equity income funds

Equity income funds offer investors the chance to generate income by investing in companies that pay a dividend to shareholders. There is the additional opportunity for capital growth in the underlying value of shares and increasing dividends.

Ultimately where you invest you funds is entirely up to you. At Brightbridge we look to offer our clients as many opportunities and resources as possible. We don't follow trends for trend sake and we never look to implement a level of risk above our clients comfort level. We know through experience that working together and making the right choices is how to grow, strengthen and mature our clients portfolios.

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