For both his stocks and shares Isa and the savings he is planning to make for his children, there is a strong argument for using a multi-asset approach. However, if he is happy with the risks involved, then regular savings over 10 years or more or long-term investments of more than 20 years should be more focused toward equities. As investment sizes grow, or time periods reduce, then a multi-asset strategy becomes more appropriate as capital protection becomes as important as capital growth.
Jaskarn Pawar, chartered financial planner, Investor Profile
A multi-asset solution would be ideal in this situation. Assuming Ms Stone has a healthy cash flow and can afford to invest the money, then choosing a suitable solution that is matched to her personal needs would work well for her. She could buy access to a variety of funds and underlying investments without the complexity of holding them individually herself.
Six years is not a very long time frame to consider for long-term investing, but if they are aware of the risks, and can take on the fact that their investments may reduce in value at the point that they want to buy a home, then it is a possibility. Of course, there may be multi-asset solutions with a relatively low-risk profile that can spread their investments very well over a number of lower-risk investments that could offer the potential for a higher return than they can achieve in a savings account.
Assuming Mr Morris has a good cash flow and some cash set aside as a reserve then investing to build up a pot of money in 11 and 13 years’ time via a multi-asset approach would be well worthwhile. He could choose to take a little more risk if he wants to and perhaps even blend a few different multi-asset strategies to see how these evolve over time.
Aj Somal, chartered financial planner, Aurora Financial Planning
If Ms Stone is looking at an eight-year term, then multi-asset investing would be possible for around £12,000 of the lump sum, with the remaining £3,000 to be used to boost her cash Isa element from £5,000 to £8,000. That would be, in effect, her emergency fund, if she needed access to monies before the eight-year term.
Mr and Mrs Jones should consider using both the cash and stocks/shares elements of a new individual savings account (Nisa). The £500 a month budget can be set aside, with £250 a month going into a cash element, and the other £250 a month going into the stocks and shares element. Although a six-year term is specified, it could be the case the couple may need some funds in three or four years’ time, so the cash Isa element could be used for this short-term purpose and the stocks and shares element for the six-plus years’ objective.
