Sailing into the future
Summer will begin on Friday 21st June and I am sure that most of us are looking forward to the warmer weather, blue skies and the chance to have a well-deserved summer holiday.
As I was thinking of summer, I began to remember day trips to Weymouth as a child. Spending a day on the sandy beach before walking along the harbour in the evening and looking at all the different boats either coming back to the harbour or moored up for the night. So many different types, from speedboats to yachts, and even the large ferry which used to run to the Channel Islands and France each day.
As a youngster I was desperate to see the speedboats, watching the bow raise out of the water and crash against the waves. This was surely the best way to travel!
Although I would still enjoy the thrill of a ride on a speedboat, I’m not sure I could stomach a trip to France for my summer holiday. I also don’t think a speedboat is a suitable vessel for going on holiday with the family.
This made me think about the similarities between boats and investing. There are so many different types which can be suitable for different people and for different destinations or goals.
I think of the speedboat like investing in shares. It might be the quickest way to your chosen destination but it’s going to be an uncomfortable journey and if you hit the wrong wave or come into some bad weather then you might experience some scary moments. If you only have one engine or hit the biggest wave then you may never reach your destination.
If you want a smoother journey then the large channel ferry might be more suitable for you, you can relax, dine in comfort but you know it’s likely to take you a lot longer to get there. This is similar to safer investments such as bonds and GILTs. It’s not all plain sailing as the ferry might become slightly uncomfortable in bad weather and hit some big waves, but you won’t be as worried as the person who chose to ride on the speedboat.
Alternatively if the ferry’s too slow for your planned trip and the risk of taking a speedboat is too uncomfortable then you might opt for something that’s right for you. FFP believe that choosing the right boat is very similar to choosing and building the right investment portfolio. It all depends on your personal feelings about risk, your chosen goal or destination and what timeframe you have. If you were able to build a bespoke boat for your planned journey then I’m sure this would be your preferred choice than just accepting a ride on the nearest speedboat or ferry.
At FFP we spend time planning your life journey and finding out what’s important to you. Do you want to get to retirement as quickly as you can or do you want to be able to spend more when you get there? If you’ve already stopped work then are your investments still right for you? Would you like to be able to spend more or is there a risk of running out of money if things go wrong?