Columnist

Tapping into the revolution in investments

By Ian Lowes, managing director, Lowes Financial Management

When I was a child the ‘pin-up’ supercars were the Ferrari Testarossa and Lamborghini Countach - both of which could fire the driver from zero to sixty miles an hour in around five seconds. Indeed I cringe slightly when I confess to having posters of both of these cars on my bedroom wall when I was a teenager.

Whilst you may not have noticed yet, many schoolboys are acutely aware that technology in this regard has recently taken a giant leap forward and the pin-up cars of today, cost considerably less by comparison and can reach sixty miles an hour in less than 3 seconds - and do so without burning a drop of petrol.

When I entered my profession the ‘pin-up’ investment fund managers (no, I didn’t have posters on my wall) were those that more often than not made correct judgement calls. No one got it right all the time, but there was, and since then, have been, those that manage to display a bit of a Midas touch – for a while. Inevitably however, most of these humans lose their shine at some point. That’s why we know it’s essential to monitor every fund in an investment portfolio and switch out when the performance isn’t up to scratch. But even where a fund manager shown consistency for years, it is still difficult to give any sort of prediction as to what will happen in the future given different market circumstances.

Just as the momentum of the electric car revolution may take a few more years before it’s in full force to the extent that the use of the internal combustion engine is not yet under threat, the fund management industry still has many decades of success ahead of it. But there’s another kid on the block that has emerged as a credible contender as an alternative investment asset class.

Consider this Investment: If the FTSE 100 is up by any amount after 3 years investors are rewarded with 30% gain. If the markets haven’t been favourable then the medium to long term nature of equity linked investing starts to come to the fore – the investment should be left another year and again, if the FTSE is at or above the initial level it will mature, rewarding investors with a 40% gain. If not it runs to the 5th year and onwards, adding a further 10% simple gain for each year it has been in force. Only if the FTSE 100 index is lower on every relevant anniversary and is 30% or more down at the end of ten years will the investment give rise to a loss from market movements.

There’s no fund manager needed to make the right judgment calls, but just ultimately a contract with one of the world’s largest banks who are obliged to meet the terms of the agreement. Sure, banks can go bust so you wouldn’t put all of your capital with one such contract any more than you would give it to a single fund manager but using a series of such investments, alongside managed funds has in our experience proven to be a recipe for successful investing.

The world is changing at an alarming pace and when it comes to managing your wealth, using the services of a good Independent Financial Adviser and Investment Manager like Lowes can ensure that you keep up with the times and access appropriate, modern vehicles to propel you on your investment journey as efficiently as possible and at a pace that’s comfortable for you.

For more information and guidance around financial planning issues, arrange a free consultation with a Lowes Financial Management Consultant or attend one of our seminars which are being hosted across the North in October. For dates, times and locations, please go to the Lowes website, www.Lowes.co.uk/seminar .

This was posted in Bdaily's Members' News section by Ian Lowes .