Target Rate of Return
Linked to asset allocation should be an understanding of the rate of return needed to achieve your objectives. For example, there is no point investing in cash assets that might generate say, 4% per annum if, in order to achieve your goals, you need to achieve a return of say, 7% per annum. In the same way, why take the risk that your portfolio might fall in value by chasing a return of 8% per annum, if you only need a return of 5% to achieve your goals.
For us, as financial planners, this is one of the key reasons to go through the financial planning process. You will have a clearer idea of what is needed. Once you understand the target rate of return needed to achieve your goals, you will be better placed to make a sensible decision about how much risk you need to take and whether you are comfortable with it.
If you have questions on any aspects of financial planning please contact info@critchleys‑fp.co.uk