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Creating an Investment Portfolio

Investment Portfolios

What is an investment portfolio?

An investment portfolio is a collection of assets put together by professional fund managers. It provides you with all the information you need to ensure your investment is considered carefully and thoroughly.

There are important elements that need to be taken into account when it comes to building a portfolio and portfolio management, which ready made investment portfolios wouldn’t be able to cover, such as risk profiling and cash flow modelling.

Risk Profiling

When making an investment, the risks involved can be great. That’s why risk profiling is such an important part of the process when choosing investments and building an investment portfolio. It covers knowledge and experience of investments, attitude to risk, and capacity for loss.

This enables the financial adviser providing their portfolio management services to ensure recommendations are tailored to the specific needs and circumstances of the trust.

Our team of experts will identify any risks by understanding your clients’ objectives and what they’re comfortable with, their expectations in terms of returns, and the level of risk they can afford to take.

The risk profiling we carry out ensures that investors are able to make a fully informed decision; one which provides them with the best possible outcome.

Cash flow modelling

What is a cash flow?

Cash flow considers the total sum of money being invested and the total return as a result of any investments.

Put simply, making an investment is like running a business: you need to know what money is coming in, what money is going out, what profits are being made from the investments, and what your financial forecast is. That’s why cash flow modelling is so important.

What is cash flow modelling?

Cash flow modelling is a tool to help investors understand both their current and future finances by generating a financial planning forecast.

Cash flow modelling considers all known income and outgoings. It can assume certain rates in terms of inflation and investment returns and helps look at various possible scenarios. In short, it gives you an excellent idea on how much income can be generated and for how long. It’s an exercise which needs to be repeated in order to consider any changes in circumstances.

The key is to plan ahead. By having a cash flow model, you’ll be in control of your finances and will be able to run accounts with confidence.

Why should you have a cash flow model?

Although it’s not an essential part of investing, most investors find it’s an extremely useful tool. It helps them to understand what level of risk and return is needed and how long an income can be realistically sustained.

In the event that you're a trustee looking after the finances of someone you care for, having a cash flow model to follow provides security to help relieve any additional stress.

Why would you need a professional to prepare a cash flow model?

Although it’s not a requirement to have a professional financial adviser prepare a cash flow model for your investment portfolio, most trustees prefer this as part of their portfolio management, as it provides them with the reassurance that absolutely everything has been taken into account and that they’re making the best decisions in respect of their investment.

Professional financial advisers are able to stringently compare the various cash flow modelling tools before deciding which one is best suited for their clients’ specific needs and interests.

How can Adroit Financial Planning help?

There are thousands of options when it comes to how to build a portfolio and how to choose investments, and the investment market is constantly changing - so it’s understandable that it can feel overwhelming.

Our job is to work with you to find the right balance of investments. Nearly all clients will need to keep some money in bank and building society deposits to ensure there are funds for short term spending and any emergencies that may occur.

When we put investments in place for you, it’s important that we fully understand your objectives for any such sum and critically analyse the types of risk that you’re prepared to accept to meet those objectives. We can also keep you fully informed of any changes in the investment market and how they affect you and your investment.

Where funds are identified as not being required in the short term, we’ll explain to you clearly and simply the alternatives that are available to you and advise on an investment plan to best suit your needs. We’ll then recommend the right tailored portfolio for you.

As we’re independent financial advisers, we’ll show no bias in deciding on the best investments for you.

If you’d like more information about the services we can offer you or your clients, please contact us on 0330 995 6838 or email us at