Diversification into different asset classes is key – the extent of which will depend on each client’s risk appetite. A balanced portfolio will generally have 40% equity, 40% fixed income, 15% alternative investments and the client will perhaps hold 5% in cash. A dynamic portfolio will probably have more equity as well as alternative investments and less fixed income.
Avoid heavy risk-taking and don’t take up too much leverage. Interest rates are getting higher and that will potentially erode your carry. If you need to leverage, you should borrow in the same currency as your investment.
Remember to look for an advisor whose interest is aligned with yours. Look for someone who listens to you. For example, he should not come into the first meeting armed with an investment proposal.
It is also crucial to stay on course. Don’t change your plans in the span of six months or one year. Even if your investment isn’t working out too well in the short term, just hang in there for the long term. Take a view, build a portfolio and stick with it.
But at the same time, you should still constantly monitor and tweak your portfolio as well as make adjustments along the way. However, don’t jump in and out of the market or make drastic changes to your portfolio too frequently. If you have a quality investment in your portfolio, keep to the course and don’t make changes just because of short-term market fluctuations.