A diversified portfolio is sensible, so you may consider holding a spread of cash, bonds and equity funds - but where do you start? This section details some of the factors you may need to take into account when making your investment decision.
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Get the right mix
Most investors have a goal in mind when making their choice of funds - paying off the mortgage or for retirement, for example. A diversified portfolio is sensible so you may consider holding a spread of cash, bonds and equity funds - but where do you start?
Here are some of the factors you may need to take into account when making your investment decision:
How long am I planning to invest for?
I hear that a diversified portfolio is sensible, but how do I decide the mix of equities, bonds and cash?
How often should I review my portfolio?
Investment timescale
The first decision you will need to make is how long you want to invest for. This will provide a guide to the type of investment that will be most appropriate.
A good basis might be to choose mainly equity funds for longer term investments in order to benefit from their potential, whereas a mix of equity, bond and cash funds may be more appropriate for shorter term investments or for investors who do not feel comfortable with higher risk funds.
When you have considered this the next step is to build your own portfolio. To help, we've provided some sample portfolios to give you an idea of how your money could be split between different asset classes according to your investment timescale.
Don't forget that it makes sense to leave sufficient time to manage the change to lower risk funds with the aim of locking in the gains made in the earlier years.
