Are your savings and investments suitable for you?

approach. But there are no ‘safe investments’ and you need to consider the impact inflation and low interest rates can have on cash deposits.

managers to meet your needs.

Protecting returns from taxation tive assessment of your personal appetite for risk, for example through psychometric analysis.

By Mathieu Edwards, Partner, Blevins Franks

ment schemes. Or the investment choices or combination of them may not meet their needs.

Alternatively, being too cautious can have consequences in your later years.

Inflation risk

Many retirees leave savings in

The Bank of England interest rate was less than 1% from 2009 to 2022, and while it is now 4%, this is to combat high inflation – currently 10.1% in the UK. This eliminates the gain and reduces your spending power. Even low inflation rates will erode your value of your savings when compounded year after year.

As a basic illustration, if you have €50,000 in a current account with no growth and inflation is 3% every year, after 10 years its value falls to around €37,000. After 30 years it’s just €20,555 – a 59% reduction in purchasing power.

Managing and balancing risk

Some risk is unavoidable to achieve an investment return to keep pace with inflation. To avoid

You then look at allocation of assets between equities, bonds, ‘real assets’ (eg listed property or infrastructure) and cash to create the most appropriate portfolio to match your profile and objectives.

The tried and tested strategy to mitigate risk is diversification — a well spread portfolio of investments across asset classes, geographic regions and market sectors, to limit your exposure to any single sector. It is widely acknowledged that asset allocation is of greater importance than the selection of individual stocks and shares.

To take advantage of the expertise of the world’s best investment managers, you need a thorough, critical analysis of funds and fund managers to select the best managers for each area of investment. Specialist advice is essential to select the most appro-

To achieve the best real returns and protect your wealth, use compliant arrangements which shelter capital from tax, provide a tax-efficient income and facilitate the transfer of capital to beneficiaries with minimum of bureaucracy and inheritance taxes.

Regular reviews

Reassess your portfolio regularly and adjust the strategy accordingly. Market conditions change and asset prices rise and fall, affecting the portfolio risk. Also consider any changes in personal circumstances. For peace of mind, get your appetite for risk assessed objectively and matched to the optimum investment portfolio; diversify across assets markets and investment views, ensure your assets are in a tax-efficient structure, and carry out annual reviews.

This article should not be construed as providing any personalised investment or taxation advice.

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THE Solgården Foundation has generously donated medical materials for people in in Villajoyosa. The materials will be distributed to eligible individuals and families by the local Social Services department. Among the equipment are two wheelchairs and five walking frames.

The President of the Board of Directors and the Director