Markets by their very nature are always heading up or down, and when speaking with clients, we frequently touch on how, at times, the ebb and flow results in an outcome that wasn’t initially anticipated.

That though is the crunch – unless you have the time to watch the market minute by minute, with access to macro and stock specific research or the support of hundreds of experienced analysts it can be difficult, if not impossible to predict an outcome with accuracy. The resources and structure of professional fund houses will generally always have the upper hand against a sole trader. So although some clients do have trading accounts, the purpose of these tends to be to enable them to ‘play’ at the market rather than investing.

Investing takes account of the individual’s objectives and goals, as well as the level of risk that they are willing to accommodate, thus enabling appropriate investments. It might be that the wealthier someone is the less overall risk they tend to take, as less significant returns are needed to meet their objectives. Additionally, the timing of an investment rarely has an enormous impact, meaning that a more nervous investor, who wishes to invest a large sum, may choose to drip feed the money into the account rather than investing the whole amount at once.

The quantity of risk is one of the largest drivers in returns, so should be carefully considered along with other factors such as the risk in existing investments. A key tool is cashflow modelling. Albeit by making some initial assumptions, this tool can provide a good steer as to the journey needed to accommodate both objectives and risk. An independent risk test should be carried out to remove any preconceived notions of the advisor and gives a much clearer idea of a client’s attitude towards risk. Across the financial services industry, advisors tend to be prepared to take much more risk than their clients and so it is important to correctly identify each individual’s comfort level.

So trading and investing both have their place, but it is important to remember that each are different activities. Trading, from an individual perspective, should be viewed in a much more light-hearted fashion, enabling an element of ‘fun’ with the market. Investing offers a more serious approach, enabling individuals to work towards meeting their established objectives and goals.

At The Fry Group we can help you to create a secure and valuable investment portfolio. For more information please contact us at 01903 231545 or email us at

This entry was posted on Wednesday, 2nd September 2015 at 12:22 pm and is filed under Financial Planning, Inheritance Tax. You can follow any responses to this entry through the RSS 2.0 feed.

Tags: Financial, investment, Planning