Financial advice to manage a portfolio of 1,000,000 - Essay Example

This would rule out any advice that may involve buying speculative shares on the stock exchange. I would suggest that the direction we need to take in this case is a conservative approach, with the intention of safeguard the capital invested whilst at the same time, if possible, creating a small income to supplement. The other area we need to bear in mind is that you may also need to have reasonably quick access to the capital to either supplement the costs of your stay here, or for any other eventually that might crop up that cannot be met from your present income sources.

What we would suggest in this instance is that between 20 – 25% of the funds should be placed into a cash situation, such as a building society, limited term bond with the ability to withdraw the funds relatively quickly if necessary. This will attract interest. The balance of the funds should be placed into bands, but it is necessary to ensure that these are what we call safe, rather than junk bonds. Junk bonds are those issued by organisations that the market considers to be doubtful in nature.

Whilst the return is higher, so is the risk. I have to mention here that all investments which are linked in some way to company stocks and shares, even the bonds recommended, can reduce in value as well as increase, although bonds values historically do not vary as much as shares. Its must also be remembered that there could be a tax implication, certainly on any interest earned, unless one has invested via a TESSA or ISA. In addition one has to taken into account the possibility of capital gains tax, which comes into force should the gain exceed a given amount.

Single parents have some unique situations when it comes to their investment portfolio. You need to make four provisions. One would be for the future, your retirement. The second provision is to provide cash