Investment Strategies That Ensure Long-Term Returns
Wealth management and asset management for large business organisations, high net-worth individuals (HNIs), and Ultra HNIs, whether you are a family office or otherwise, requires creation and rigorous adherence to constantly evolving, dynamic investment management strategies. Truth be told, this process is best left to the professionals!
But it doesn’t mean you should not be an educated investor, involved in the process, and aware of, at the very least, the basics of how best to manage an investment portfolio. Indeed, you are not alone, wanting to get more involved in the process. Globally, there has been a major shift in investor mindset. The new generation investors think differently and expect different things from their investments.
Which, we guess, is what brings you here! Worry not, we at Xanara have you covered.
How to Strategize Your Investment, Wealth & Asset Management?
When you strategize your Investment, Asset & Wealth Management, what you are really doing, is finding and employing the best avenues of investing your funds and utilising your assets, so that, in the long term, it gives you optimal returns on your investment. There, unfortunately, is no one strategy that fits all, as every investor is unique, in terms of the asset mix in the portfolio as well as target financial goals. Whether you are an organisation or an individual or a family office, a bespoke investment strategy that takes your unique financial situation and aspirations into account and draws heavily from what you, as the owner of the asset/wealth, want from your investment, is really what you need.
Typically, though, any investment strategy should address three crucial aspects:
- Creation – how to create your wealth and assets.
- Growth – how to optimise the investment of the wealth created and utilisation of the assets acquired so that in the best of market conditions, they grow and in the worst of them, they don’t deplete.
- Stabilization – how to keep your net-worth shielded from market risks and a good exit strategy.
The good news for the informed investor like you is that, with the marked increase in the usage of technology on a global scale – whether artificial intelligence (AI), big data and analytics, or robo-advisors – information about highly specialised skills (like market conditions and predictions) has also become available to you in a form that you can comprehend.
Long-Term Investment Strategies for Your Assets:
There are very few high rewards, short-term investment opportunities for assets. Investment strategies for assets typically are long-term in nature, as assets take time to appreciate in value. The development of a successful asset management strategy requires you to understand and manage the complete asset lifecycle – acquisition costs, estimates and plans to ensure the cash flow from the asset (or elsewhere) covers the costs of operating & management of the asset, required upgradations, maintenance, and upkeep and finally, plans for disposal when the asset has outlived its utility.
So, while creating a strategy to best utilize your assets, you should typically:
- Review your current financial situation, investment portfolio, and valuation of your assets. If you are thinking of acquiring new assets, figure out if the cost-benefit analysis of the target asset is in your favour.
- Chart out the goals sought to be achieved through the strategy. What would you like to do with the assets you have or want to acquire, and how would you like to position your overall financial portfolio?
- Prepare a suitable strategy keeping in mind the two points above.
- Implement the strategy.
- Constantly monitor the performance of the strategy to make sure the assets acquired are utilised well, have not outlived their lifecycle, and/or if any changes are required in the utilisation avenues in case the returns are sub-optimal.
Investment Strategies for Your Wealth:
Strategies for investing in your wealth are similar to managing your assets but differ in some crucial ways. Wealth typically refers to your liquidity and moveable assets like shareholdings. You must have heard/read it often enough – a good investment portfolio should be varied, flexible, and adaptable. What this means is that your wealth should be invested in multiple avenues, some short-term ones together with some long-term ones. This is because short-term investments concentrate on wealth creation, while long-term investments focus on wealth preservation.
Why preserve when you can create? True. But short-term investments are also the ones that usually carry very high risks, and it is never advisable to put all your eggs in one basket!
Your wealth management strategy should be based and focus on:
- Your current financial situation, projected inflows, and outflows. Budgets for contingencies should also be considered.
- The desired results from the strategy. Is there anything specific you would like to achieve, in a given timeline?
- Preparation of the right strategy, balancing your risk appetite against the safety of your wealth.
- Implementation of the strategy. Automate the safe investments, and keep manual control over trickier ones.
- Regular review of the performance of your investments, even the automated ones. It is important to take prompt steps to redirect underperforming investments to better avenues.
What Investment Strategies Work Best For Long Term?
While short-term investments concentrate on high risks and increased ROI, long-term investments explore more traditional, safe investment opportunities that will not look attractive just now but will serve you better a decade down the line. A good investment portfolio is an optimum mix of both short-term and long-term investments.
Some of the time-tested long-term investment avenues are:
- Bonds. These carry a fixed rate of interest that will not look lucrative in the short term. However, they are about the safest investment one can make and work really well in the long run. Bonds are issued both by private companies and governments.
- Real Estate. Converting your wealth into assets has many advantages, including a steady stream of income and tax benefits. However, the cost-benefit analysis of the property being considered for acquisition must be thoroughly examined – if the costs of operating and managing, maintenance and upkeep, and taxes payable exceed the income generated, for example, then obviously it would be a bad investment.
- Stocks & Shares. Typically, stocks and shares are viewed as short-term investment options. However certain stocks and shares, especially the ones that are growth stocks (i.e. appreciate in value over the long term) and those that pay high dividends can be excellent additions to a long-term investment portfolio.
Why Entrust Your Investment Management to Professionals?
Strategizing your investment, asset & wealth management requires a fair bit of experience and expertise, and constant monitoring to keep up with the fluctuating market conditions. You, as an educated investor, might have the information, but actually using the information to implement, constantly monitor and suitably revise the investment strategy is a full-time job – one that you possibly don’t have the time or the expertise for.
Things get even more complicated where wealth transfers in generational businesses and family offices are involved. There are matters of taxation, retirement planning, and various other aspects to be taken care of.
Professional financial advisors and planners like us not only have years of experience in managing our client’s wealth and assets globally, we also have the benefit of having access to specialised software and robotics that are revolutionising the field of investment management. We don’t just know how to create, optimise and nurture your investment portfolio, it is our superpower!
As we say at Xanara, the best management strategies are born when the science of a systematic approach comes together with the art of accessibility and adaptability. Reach out to us today, and watch your wealth grow.