Building an investment portfolio

Most people will want some or all of the following from their capital:

• Access to their money
• Income to supplement pension or any salary
• Growth to maintain their standard of living over time
• Security to reduce exposure to risk
• Tax efficiency so that as little of what you earn is lost to the taxman

Your stage of life and personal circumstances will probably determine in what order of priority you consider this list.

When looking at investments there are 2 categories; those that are Capital Protected and those that are not, known as Risk investments. In building a balanced investment portfolio both of these are essential elements, but the emphasis on each will be unique to an individual's investment objectives and their attitude to risk.

To meet your investment objectives we apply the principles of investment to construct a balanced spread of assets. It is often said that the best ideas are the simplest and we explain a balanced investment portfolio with reference to the 3 Boxes.

We divide capital into 3 Boxes so that we can manage the investments in each to a single defined objective i.e. to produce income at a defined return rate at a given time, to provide you with access to your money or to produce growth exceeding inflation. In addition, by dividing capital we reduce concentration risk. The 3 Boxes are flexible and the mix between access (Box 1), income (Box2) and growth (Box 3) can be altered, enabling you to adapt to your needs as they change over time.

The particular investments and the proportions held in each box will vary from client to client. Our Investment Management Team make their investment decisions and vary allocations within agreed parameters at their discretion on an ongoing basis.

In a typical balanced 3 Box portfolio, there are around 72 different investments.