The markets finished 2017 in good spirits, with a positive outlook for the US economy in particular, but there is still plenty of uncertainty out there – not least in geopolitical terms. It’s clear that some of the most high profile political issues – for example around tax and immigration – could have a big impact on the market, especially for a tech industry in the US that is heavily dependent on foreign talent.
Whatever happens, it’s a reasonable bet that tech will remain the biggest sector throughout 2018 however, with new innovations continuing to drive the markets. There are definitely gains to be made out there then – so what is my advice for high net worth investors as we head into 2018?
- Review your finances
I’d start any new year off with a thorough review of your finances, whether you think you have a firm grip of what’s happening or not. It’s just a great way to perform a general health check of your finances – I always make sure I check my credit score to make sure that there are no hidden issues I wasn’t aware of.
- Be clear about what you want to achieve
As a high net worth individual, it’s sometimes easy to live in the short term. You have more than enough money to live comfortably now, and have some plans in place for the future. But it still pays to plan ahead – engage the services of a good, well-respected financial adviser, and speak to them about what you really want to achieve in financial terms. They should help you to concentrate less on managing the money you have now, and more on your longer term financial goals. You’ll be surprised by the insight and perspective they can offer.
- Don’t be afraid to ask for advice
So, I’m a successful entrepreneur, who has come a long way already over the years. I know my businesses inside out, so what do I need with an external financial adviser? Well, I’ve always found that it pays to listen – particularly to experts who can give you the big picture in an environment that is often very short-sighted in its behaviour. The insight that a good financial adviser can give you is invaluable, even if – in fact, especially if – you are a high net worth individual with a large amount to invest. According to the Advisor Authority 2017 report, around a third of affluent investors don’t seek the help of a financial professional – my advice is to get all of the advice you can, and get ahead of the pack.
- Understand how your financial adviser is paid – and act accordingly
The flip side to having a great financial adviser is that it’s really important to understand how they are earning a living from the money you’re asking them to look after. A smart move in 2018 would be to take a long hard look at how your financial adviser is compensated by the products they’re suggesting would benefit you – my advice is to be on top of it, and take a proactive approach to managing your portfolio for your benefit, not theirs.
- Understand what you’re paying out, and why.
As a high net worth individual, you’ll be used to managing a large portfolio of different assets and financial products. But it’s also easy to lose track of fees – especially with products that might have changed since you first took them out. It’s the same with any assets that you may have inherited – it’s well worth doing a thorough audit of everything you have to make sure that you’re not paying out unnecessarily.
- Invest in tech
The markets are booming – and much of the growth is in the so-called FAANG stocks – the big tech companies, Facebook, Amazon, Alphabet, Netflix and Google. My hunch is that their stock isn’t going to plunge any time soon – all of the major revolutions, in retail, in transport and in the entertainment industry, are being driven by the remarkable pace and power of innovation from the technology companies. So,
- … But don’t just invest in tech.
Look for value – find those companies whose stock is affordable, that are well-run and have proven themselves over the long term. This kind of thorough, big picture approach has gone out of fashion recently with the rise of the big five tech companies, but I’d always say it is a good bet. You’ll be putting your money in to businesses that are built for the long term, and not just following the latest market darlings.
Ultimately, the markets are on a roll at the moment – but as a high net worth individual you have the capacity to be able to both reap the rewards of the current market while investing conservatively enough that if (or when) the pace slackens you can ride it out.
