The questions you should be asking about your investments

As summer holidays draw to a close, it is the time many people focus again on their financial position. We are often asked about our Black Swan Capital approach to investment management, our financial planning approach across market cycles, and what people should look out for when reviewing their financial position.

As a guide, here are seven key questions that all expats and international professionals living in Europe should be asking when assessing their investments, pensions and other assets.

Considering these seven points, can provide perspective and help refocus on what is most important when managing your assets. Of course, if these raise any further questions, or if you need clarification you can ask us; you can contact us at info@blackswancapital.eu.

The questions:

1. What are your goals- what are you trying to achieve?

This is where you need to start. To know if you are on track with your investments, you need to know three points of data: where you started, where you are headed, and where you are now. the first two are straightforward, but if you don’t have a goal, you will not know when you get there, or if you are on track along the way.

If you don’t have them, take some time to think about, and write down, what you want to achieve.

2. Is there strategic alignment between your investment and your objectives?

Linkin to the above, this provides relevance and understanding as to why you may be holding a particular investment. On the basis that an investment is just a means to an end, that it helps you to achieve a life goals, this question checks whether your investment has been set up to specifically achieve your goals, or not. If there is alignment, and subject to the following questions, it may be a good argument for maintaining your investment. If not, it may be a trigger to make changes that better align to achieving your goals.

3. Is there tactical adjustment to the markets?

Whilst staying the course and being consistent is important, tactical adjustments to changing market cycles is important. For optimal long term investment management, you should have alignment to what you are trying to achieve, adapted for changing global dynamics. Make sure you have this.

4. Is it compliant with jurisdictions?

This is a fundamental question that is so important to expats in Europe to make sure you are protected under the local financial regulations and that you are compliant with the requirements of your residency and your citizenship, as well as any other country where you may have a tax or reporting obligation. It is wise to be in regulated investments.

5. What is the performance relative to your goals and your risk profile?

This is a pertinent question in all markets. The performance of an investment should be considered over an appropriate time frame, typically a medium to long term ,and should be in line with the risk and volatility profile of your portfolio mix. You can look at how it is performing against a benchmark of a similar risk and asset mix profile.

6. Do you have short term need for this asset as cash?

If you have a need for cash from an investment in the short term, typically less than one to two years, it is often wise to not be exposed to short term market volatility, and hold that asset in low risk cash or cash equivalents. Conversely, if you do not have a requirement for the money that is invested, if you satisfy the other questions, it points to you being able to continue to hold the investment through volatile patches. In this case holding cash might be a more risky position.

7. Does the performance keep you awake at night?

The second personal question. This relates to how you feel about your investment. If it is causing you stress- usually because it is not invested in line with your risk profile- you should consider what you can do to remediate this. It may be causing you stress because there is too much volatility and negative returns beyond levels you are comfortable with, or it may be causing you stress because it is too conservatively placed, and you are not generating the market returns you expect (not enough return).

In either case, speak with your adviser and align your portfolio to your goals and your risk profile to reduce this source of money stress.

If you have any questions about your investments or would like advice or a second opinion, contact us at info@blackswancapital.eu.