Investing – Where to Start?

Year of the Snake: Investment Advice for 2025 and Beyond

In the Chinese zodiac, the snake is associated with wisdom, adaptability and transformation. It turns out these characteristics aren’t dissimilar to the approach we take at Bentley Reid when advising our clients on their investment portfolios.

With the start of the new year behind us, now is a good time for reflection and planning.

As we know this can feel daunting, we wanted to offer some guidance on how to go about this.

What are your investment objectives?

We know from experience how easy it is to get caught up in investment outcomes. However, whether you are focused on investing for income, capital preservation, or capital appreciation, each desired outcome comes with different risks, returns and time horizons.

Though it’s good practice to assess and generally ask yourself what you seek to achieve in your investments each year, it’s also important to review how these outcomes align with your stage of life – such as buying property, planning for retirement or supporting a family – and whether they are still appropriate or need to shift slightly. This helps to build a clear picture as to your investing objectives, which then should match a desired – but relevant – outcome. 

Once a clear objective is established, you can then look to tweak your existing portfolio or build a portfolio that seeks to achieve your investment ambitions.

When was the last time you reviewed your portfolio and expenses?

It might seem tedious, but reviewing your existing investments against their objectives and last year’s performance is crucial to making sure your portfolio is effectively meeting your investment needs. 

While the static percentage performance is an important indicator, it shouldn’t be looked at in isolation. It’s important to take this a step further and match its performance to a benchmark to understand where performance has deviated either positively or negatively. 

For example, in years like 2024, although the S&P500 performed exceptionally well it did not necessarily translate for many multi-asset managers who had wider investment parameters as well a geographic diversification.  This is not necessarily a bad thing though, as the managers’ investment objective is often to achieve stable long-term returns with diversified portfolios and avoid some of the concentration risk in the S&P500.  Again, it all comes back to the investing objectives.

Have you considered cash planning and investment management?

Now that the holiday season is over, it is important to ensure you have enough cash or liquid investments for your family and capital requirements.  Depending on circumstance, we generally recommend having anywhere from one to multiyear capital needs retained in cash, as well as cash for known capital items (e.g. property). Having cash allows you to ride out the inevitable up and downs of equity market investing – especially in this climate.

Though FOMO in investing feels real, the real risk in investment is permanent loss of capital.  This often arises when investments have to be sold at the bottom of market cycles to provide liquidity for family needs. 

In today’s world of higher interest rates, cash can generate positive returns, and it also allows you to take investment risk elsewhere.  

Making necessary portfolio adjustments to rebalance

On a proper review of the above points there should be clarity as to how your current investment portfolio compares to your investment objectives. Ensuring you retain liquidity, and topping up liquidity needs by selling some better performing investments is sensible, especially after the couple of good years of investment returns that we have seen in 2023 & 2024. 

If one of your investment managers has not been delivering against your objectives and along with benchmarks, there are different approaches you can take. One to consider is disproportionately selling down that portfolio for your liquidity needs, and/or relocating assets and liquidity to another investment relationship.

Looking ahead

Ensuring medium term needs are retained in more conservative defensive investments for the coming years is also good planning. This then allows you to ensure pure equity exposure has a longer time horizon over which terms equites have traditionally outperformed.

While this all may seem rather simplified, from Bentley Reid’s extensive experience advising clients, we know that simple planning allows for sensible long-term investments where returns compound and capital builds over time.

To find out more about Bentley Reid visit https://www.bentleyreid.com/