When it comes to using an established firm for your investments, benefits abound. Before going into the top three advantages of engaging one, let’s delve into exactly what investment firms do.
As defined by Investopedia, “Investment companies can be privately or publicly owned, and they engage in the management, sale, and marketing of investment products to the public. Investment companies make profits by buying and selling shares, property, bonds, cash, other funds, and other assets”.
So, now that has been clarified, what are the benefits of investing through an investment management firm? Read on to find out.
Diversification
As far back as the early 1600s, Miguel Cervante’s Don Quixote pointed out that, “It is the part of a wise man to keep himself today for tomorrow, and not venture all his eggs in one basket”.
Fast forward 400 years, and by not putting all your eggs in one basket, you help to reduce unwanted risk to your portfolio. Diversification works by preventing any one investment asset or asset class from being too heavily weighted, potentially affecting the performance of your entire portfolio. Because dissimilar asset classes — and even specific assets within the same asset class – react differently to conditions in the market, diversification spreads out your risk.
Moreover, diversification opens up the mix of assets of different risk level. A balanced portfolio may include slow and steady bonds alongside high risk and reward stocks.
According to Corbin Blackwell, “No matter what your goal is, diversification is a key to investing”. Since investment firms typically participate in a range of assets, can readily diversify your portfolio, thereby spreading your risk when the market is volatile.
Professional Management
Investing is one of the best ways to build wealth and reach your long-term financial goals. But what should you invest in, when should you buy, and when is the right time to sell?
Have you ever had the urge to pull your money out of a particular investment because of a temporary dip in the market? You are not alone! One of the investment problems many investors encounter is emotionally driven decisions and perceptual biases. Yet investment decisions must be made as clinically and objectively as possible.
But overcoming human nature is easier said than done. Cue the careful analysis and balanced long-term outlook of your professional wealth advisor. With their expertise and experience, they understand that negative returns in the short run often lead to long-term gains.
Using an operating investment firm means that your portfolio will be managed by industry experts. Leveraging their skills ensures your investments align with your wealth accumulation goals.
Affordability
One of the less obvious pros of investing with the assistance of a private wealth management firm like Nour Private Wealth is its affordability. There are two elements to this:
- As an individual investor, access to larger investments may be troublesome. But by joining forces with other investors, you open up the possibility to yield the considerable returns associated with major projects.
- What’s more, with professional management of your investment portfolio, you are setting up a legacy of multi-generational wealth creation and protection. Another invaluable, long-term cost-saver is mitigating your tax liability thanks to the insight of a team of professionals.
Nour Private Wealth (NPW) is a Canadian company with a team of wealth advisors servicing high-net-worth families across seven provinces. Let us manage your portfolio to ensure your retirement and investment goals are in safe hands. Our expert investment planning services use a diverse mix of asset classes to deliver strong returns while minimizing risk so that your wealth continues to grow. For more information about our investment benefits in Canada, contact us today.
This commentary is provided for general informational purposes only and does not constitute financial, investment, tax, legal, or accounting advice. Please speak with your accountant about tax or accounting advice. Individual circumstances and current events are critical to sound investment planning and not all investments are suitable. Please speak with your investment advisor prior to investing.
