The past year has presented significant challenges for the legal sector.
While areas such as conveyancing have seen spikes in demand following the re-opening of the housing market and the announcement of the stamp duty holiday, others, such as corporate segments, have seen lulls in enquiries at certain points in the year.
On top of managing peaks and troughs in business volume, the profession has also had to adapt to the challenges of new ways of working, including servicing clients remotely and attending hearings online.
In this environment, tasks like managing your finances and ensuring you’re getting the most out of your finances might have understandably fallen to the bottom of your to-do list.
However, with interest rates currently lower than inflation, simply keeping cash in the bank means that the value of your savings effectively falls over time.
Investing can offer ways to grow your wealth by helping to beat low interest rates, outperform inflation and build new income streams.
Whether it’s savings for a rainy day or money towards buying a new house, having the right investment strategy can help to deliver the return you need.
Here are some important questions to consider before embarking on an investment journey.
Is investing right for you?
The most important thing to consider when considering investing is whether or not your own financial position, and any other financial commitments, makes investing the right choice for you.
Investing is not a ‘quick win’, but rather a way to consistently grow the wealth you already have. It typically takes place over a long period of time – often for a period of at least five years, but typically much longer.
Before you put money aside for extended periods, to deliver the return you would be happy with it’s important that you consider whether this is possible within the context of your finances as a whole.
If there is a chance you will need to access your savings in the short-term – to cover any unexpected changes in circumstances, for example – investing may not be a sensible choice because you’ll undoubtedly encounter the normal ups and downs of the stock markets, which are best navigated over longer time horizons.
To ensure that your strategy continues to support your goals, particularly as your priorities shift, it’s important that you review your investment portfolio at regular intervals.
Why are you investing?
The first thing to do is decide what the money will be used for in the long term. You may want to save for a house deposit, your child’s university costs or your retirement, or you may just want to make your financial future more secure.
Timeframes are also important factors. For example, a lawyer looking to generate income for retirement will likely hope to build more return on their investments than someone saving up for a dream holiday.
How much risk are you willing to take?
Your attitude to risk, combined with an understanding of how you want to use your money and how much you want to generate, will help inform what you invest in.
Assets that you or a fund can invest in include stocks (also known as ‘equities’ or ‘shares’), property (typically commercial property is held within funds), corporate and government bonds, and cash. Each comes with its own level of risk – which itself can change over time – and its own degree of reward.
Even if you’re comfortable with high levels of risk, it’s a good idea to diversify your investment portfolio by spreading investments across asset classes, which offers a degree of protection against a single asset’s poor performance.
That’s why investing in a fund may be the right move for you. Investment funds usually comprise many different types of assets, spreading the overall risk, and every fund has a risk rating that you can measure your own attitude to risk against.
Are you committed to the long game?
Similar to your commitment to staying on top of any changes and developments in the legal world, it’s important to have a constant eye on the performance and suitability of your investments.
To ensure that your strategy continues to support your goals, particularly as your priorities shift, it’s important that you review your investment portfolio at regular intervals.
The expertise of a professional adviser can help ensure that your investments are delivering for you. At Wesleyan, we understand the unique financial needs of those in the legal profession and have financial consultants on hand to support you throughout your investment journey.
For more information visit: https://www.wesleyan.co.uk/secure/lawyers-1002658
Note: There is no such thing as a totally risk-free investment, and it’s important to remember that the value of your investments can go down as well as up, especially when invested in stock markets, which can be volatile. Ultimately, you may even get back less than you put in.
