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Three key questions to help inform an investment strategy


On May 6th, 2022, the Bank of England’s Monetary Policy Committee inched the Bank Rate up by a quarter of a percentage point, pushing it to the highest level for more than a decade.

Notable though this move might be, the fact that interest rates stand at 1% means they still remain a long way off historical peaks. At the same time, UK consumers are having to make their money stretch ever further as rising inflation results in higher costs.

For many with savings, this set of circumstances has prompted an evaluation of how best to manage and grow their wealth, leading some to consider the merits of investing.

While often characterised – or caricatured – as the buying and selling of stocks and shares, investments can in fact take many forms, providing individuals with various ways to invest their money with a view to generating returns over a period of time.

By the nature of the fact that investments can go down as well as up, they represent more risk when compared with savings accounts. This can mean they are not for everyone – indeed, just 12% of people in Britain agree with the statement “I like to take risks in the stock market”.

However, research has found that trust in financial markets has grown in recent years, with 51% of retail investors in the UK saying they trust their financial services sector in 2022 compared with a figure of 33% in 2020.

For those weighing up the question of whether or not to invest, at Vintage, we would also suggest considering three further questions to help inform you approach.

What’s your appetite for risk?

For any individual, it is not only essential to have a clear understanding of the risk-based nature of investments, but it is also crucial to evaluate your own personal appetite for risk. While all investments are predicated on the overarching objective of generating a higher return from your initial investment over time, there are no absolute guarantees. Companies, funds and markets are subject to a variety of variable forces, and no-one can state with certainty that strong past performance will be repeated in the future.

What are your investment goals?

Perhaps a simple question, but one that can uncover valuable answers to help shape your investment decision-making. For example, if you are clear about aiming for a particular level of returns or to fund a particular event then this information can be used to influence the amount of money you are planning to allocate, and the level of risk associated with that investment. Your goals might also be aligned to ethics and a desire to make a positive difference, and this can be achieved by investing in funds that support companies and investment vehicles with strong environmental, social and governance (ESG) credentials.

Are you prepared to take a long-term view?

When you have clarity on your appetite for risk and your particular goals, it’s important to approach the whole area of investing with a level head and a long-term, strategic view. Decisions rooted in emotion and knee-jerk reaction, are more likely to lead to regret. In contrast, when you are equipped with a measured mindset, you are better prepared to make choices about when and where to invest, and also about where and when not to invest. In addition, companies, sectors or the market as a whole are not immune to volatile movements, but the stability of a long-term perspective based on regular investing can help smooth these episodes over time.

While there are many more questions that you will face on the investment road, these three provide a useful initial framework when starting your journey. From here, you can progress to consideration of the many investment vehicles that allow your risk profile to be married to your financial goals, your investment timeframe and your ambitions for returns.

This might manifest itself as passive investment in a collective fund or active involvement with a qualified investment manager to establish a bespoke portfolio of equities, bonds and guilts. Alternatively, it might result in you depositing the maximum annual allowance of £20,000 into a stocks and shares ISA, where any income generated is free from dividend, capital gains or income tax.

Whichever investment route you might end up pursuing, the proverb tells us that ‘forewarned is forearmed’ and asking yourself just three questions at the outset can provide answers that will help successfully guide your first steps.

The information contained within this communication does not constitute financial advice and is provided for general information purposes only. No warranty, whether express or implied is given in relation to such information. Vintage Wealth Management or its associated representative shall not be liable for any technical, editorial, typographical or other errors or omissions within the content of this communication.