Four Things to Consider with Your Investment Manager

Everyone is different in terms of how hands-on they want to be with their money management. Some are content to turn over their funds to a reliable investment manager (read more about investment management here). In contrast, others want to be more involved in the day-to-day decisions regarding their money. But wherever you are on that spectrum, here are four topics you should talk over with your investment manager.

Your Timeframe

It’s pretty evident that your preference for long vs shorter-term investments will depend on your age. However, even if you are relatively young, you may have needs that you are planning for, such as higher education or starting your own business. Or maybe you are in such a good place that you can plan on retiring early! Whatever your situation, a discussion about when you need to realize the returns on your investments needs to be on the agenda when you meet with an investment manager or financial advisor.

Risk Tolerance

The amount of risk you are willing to accept is a hugely personal decision, though it should be, in part, dictated by some life circumstances. If you are older and looking to retire soon, you will probably want your investments to be at lower risk. You don’t want to lose everything just as you are hitting your golden years. But if you are younger and just starting your retirement savings investments, you might have a higher tolerance for volatile but potentially high yield investments. Or you may just be cautious by nature or a daredevil. Either way or any way in between, it is an important conversation to have.

Diversification

How much diversity you want to see in your portfolio is closely related to your level of risk tolerance. Putting all your eggs in a high yield basket, so to speak, can have a big pay-off but also makes you highly vulnerable. Having your assets spread out in many different places mitigates that risk, but it might be frustrating if you have a limited investment in a fund, or market, or company that takes off. You might want to learn how to buy Bitcoin or consider angel investing as alternative options. You and your investment manager should discuss the possibilities, including strategies for mixing lower and higher-risk investments and making different kinds of investments.

Your Values

You may not care where your money is, so long as it is busy making you more money. But many people see investing as a form of supporting the practices of a business or industry in a very literal way. In the 1980s, many investors divested from their portfolios in South Africa to withdraw support from the Apartheid government. Since then, there have been various divestment movements, and there are funds available to invest in that support certain societal goods, like green energy. The saying is that you should put your money where your mouth is. Think about the values that are most important to you and how those values are reflected in society. When you meet with your investment manager, go over what is important to you to develop an investment strategy that honors your ethics.