Investors warned to avoid quick-fix solutions

PRIVATE investors looking to capitalise on an upturn in markets should be wary of taking short-term investment decisions based on the latest product launches, a senior wealth adviser has said.

David Sweeney, newly appointed head of wealth advisory at PricewaterhouseCoopers in the Midlands, said investors could be better served by lower risk strategies.   

Mr Sweeney, who has more than 20 years experience in the private client sector, has joined PwC only recently.

Working alongside experts in other areas, such as tax, he will be advising investors on an integrated approach to managing their wealth.  

The firm said many investors were now feeling more positive about the state of the markets and many had seen their portfolios bounce back from considerable losses.

Mr Sweeney said that as many investors now looked to claw back their losses they should avoid making hasty decisions.

“As the upturn gathers pace, we are continually seeing new funds being launched in a variety of areas, such as emerging markets or so called structured products, to attract the attention of investors,” he said.

“However, they (investors) should be wary of looking for the next big thing to invest in and instead consider a risk managed approach to ensure the most stable returns in the long term.”

While the promise of short-term gains from investing in new products could seem tempting, he said private investors should not forget the fundamentals and take steps to protect their wealth for the future.

“Private investors should avoid incurring additional management fees and deal costs caused by continually switching between funds.

“Academic research shows this does not add value. The movement of funds can result in tax liabilities and funds should be invested in tax efficient vehicles,” said Mr Sweeney.

He added that the recent increase to the higher rate of tax meant that, where possible, individual investors should look to generate gains rather than income from their investments.

This is due to capital gains being currently taxed at just 18% and benefiting from an annual exemption of £10,100.

“It is important that each investment decision is considered as part of a wider, long-term wealth strategy and that this strategy is reviewed and rebalanced to reduce potential risks,” he added.