An investment strategy is a very personal thing. Your investment decisions need to be in line with your financial situation and your life plan. Your personality and your ideas about your own legacy also need to be taken into account. How do you find the right investment strategy? Let us show you.
A personal investment strategy requires answers to the following questions
An investment strategy is built on a risk profile, which is based in turn on your risk tolerance and risk appetite. You’ll need to ask yourself objective, economic questions around how much financial risk you are willing or able to take:
- How high is your income?
- What savings do you have?
- How much would you or could you save regularly?
- When do you need your invested capital?
- How much longer to go until you retire?
Subjective, personal questions are also part of your risk profile:
- How do you react if you suffer a loss or achieve a substantial gain?
- What level of risk are you willing to accept?
- What margins of profit and loss do you feel comfortable with?
Coupled with your personal investment horizon, this will result in an investor profile that is used to develop your personal strategy. Our “UBS Wealth Way” advisory approach goes further and asks the following key questions:
- How are you planning to realize your life vision? What do you want to achieve in your life? What will your legacy be?
- What are your worries and fears?
- Which people are particularly important to you? How can you give them security?
- How can you ensure that you achieve your life goals?
Using the “Liquidity, Longevity, Legacy” strategy to generate your personal investment concept
Based on your personal life goals and plans, three periods in your life are considered:
- Liquidity – the next 3 years: The key question here is how much liquidity you need over the next three years to maintain your standard of living. This includes everything you enjoy, be it travel, art, culture, sports, gastronomy, fashion or major purchases such as real estate.
- Longevity – from 4 years until the end of your life: This time span is about how you can improve your standard of living in the long run – ensuring a comfortable retirement, buying a second home, fulfilling long-cherished dreams until the end of your life. It is particularly important for women to find a tailor-made solution for retirement provision, because they live longer than men on average and therefore also need more retirement capital.
- Legacy – from now until the end of your life and beyond: The “UBS Wealth Way” approach also looks at what remains when you’re no longer here. This ensures that projects and ideas that are close to your heart will continue to be supported in the future, including, for example, gifts to your family, philanthropy projects or the passing on of your wealth down the generations. The “Liquidity, Longevity, Legacy” strategy lets you develop an investment concept that benefits you in the long term and which fully supports your life goals.
Diversification is the key: how to spread risk
To be able to think and invest in the long term, two points are essential: diversification and the ability to handle volatility calmly. Turbulence on financial markets triggers a rollercoaster ride of emotions and can lead you to question your financial strategies. It is not uncommon for woman investors to sell their positions at a loss, especially in the midst of prolonged, significant reversals. A tailored investment concept according to the “Liquidity, Longevity, Legacy” strategy helps to avoid emotional traps. Sound liquidity planning will ensure that your lifestyle and planned investments are not put at risk. Only a correctly diversified portfolio offers you the opportunity to spread your money so as to minimize risk, including in a crisis. Your investment strategy can also accommodate topics that are particularly close to your heart.
It will of course be regularly reviewed by your client advisor and adjusted as required, both in terms of changing needs and diversification.
Calm and composure for long-term success
Volatility is a fundamental feature of all investments – depending on the asset class, the value of your investment can change very significantly. Stocks, for example, can promise quick returns, before losing value just as suddenly. Don't let this throw you off balance.
If you panic and decide to sell immediately – especially during short-term fluctuations – you’ll probably suffer losses that could have been offset by tolerating volatility in the long term and sticking to your investment strategy. One of the main tips for long-term investments is not to be swayed by your emotions.
This is often easier said than done, but it’s absolutely central to long-term investment success. In turbulent times, concentrate on the facts. Study the comprehensive information and analysis of risk and potential that your bank provides, for example, in the house view. Stay up to date, ask your bank for information and discuss possible scenarios with your advisor.
And be disciplined. Above all, successful investment requires discipline to remain invested in the long term, to make rational decisions and not to let yourself be thrown off course by difficult periods. This will ensure that your money is invested in a way that suits you and your needs.