Should I update the investment portfolio I inherited?

Portfolio risk diversification and mangement for long-term sustainable growth, financial concept

Ask the expert at Smith & Pinching about updating an investment portfolio that you inherited - Credit: Getty Images/iStockphoto

I’ve inherited an investment portfolio from my father. He had strong views about supporting different countries and most of his investments are with large businesses in either the UK or the US. Some of them haven’t been doing so well recently, but overall the portfolio seems to have grown steadily over the years. Should I change what’s in it to get a wider range or stick to what he’s got?

Richard Barker, Chartered Financial Planner with Smith & Pinching

Richard Barker, Chartered Financial Planner with Smith & Pinching - Credit: Smith & Pinching

Richard Barker of Smith & Pinching responds:

There are two main points to make here. Firstly, we would normally recommend that an investment portfolio contains a diverse range of investment types in order to spread any risks you are taking. The old adage of not putting all your eggs in one basket is as true today as it ever was. Diversification can help mitigate falls in values in specific market areas at any given time, but this must be done methodically, as there is in fact a risk of over-diversification. It is a case of quality over quantity.

Secondly, it’s important that your investment portfolio is made up of elements that are right for you, rather than for your father. We call this “suitability” – your portfolio should reflect your attitude to risk, your preferences (such as your feelings about ethical investing) and what you want to achieve with your investments. They should be chosen in line with your overall financial plan.

Your financial plan is key to your investment strategy. I strongly recommend that you talk to an Independent Financial Adviser from a firm of Chartered Financial Planners to build a financial plan that will identify what you want to achieve and work out what investment choices will help you reach your targets.

It’s also important to say that an investment portfolio should be reviewed and adjusted regularly to ensure that it is keeping you on track to achieve your goals and that its content remains suitable for you. It may also be that some form of portfolio management would be of benefit. This is where you appoint an investment specialist to adjust your portfolio on a regular basis to take account of market changes.

The aim of portfolio management is to maximise growth and mitigate any potential losses, within agreed parameters. Some advice firms will provide this via a third-party investment management company whereas others, such as Smith & Pinching, offer this as part of their core investment advice service.

Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

For more information, please visit www.smith-pinching.co.uk

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