When doing nothing can be the best approach

When it comes to your money, there is a dizzying range of choices available to you.And around this time of year, there seems to be an unending list of ways to move your money around to minimise tax.While some of these could be a smart move for you, others won’t. And it’s our job to figure this out for each individual client.

To do this, we look at your entire financial circumstances. Because everything you do will have a ripple effect on something else.For example, a particular investment might seem attractive on the surface. But if you look at the bigger economic picture – as well as the investment’s interplay on other parts of your financial arrangements – it can lose its gloss.When this is the case, our advice will often be to do nothing, because we believe it will serve you better overall.

When it can be best to sit tight

Examples of when we may advise you to ‘sit tight’ include when we believe:

• It’s better to use your money to pay off or reduce a debt than to invest or purchase an asset. This would occur where the cost of servicing the debt is larger than the likely return you’d gain from the asset.
• The current cost of a financial product is too high, and we believe its cost is likely to fall in the future, so it’s better to delay buying it.
• There is no suitable investment currently available that satisfies our criteria regarding its cost, likely return and risk profile.
• It’s best to ride out market turbulence (rather than crystallising a loss by selling at a low price point, or buying expensively at a high price point).
• There are economic or legislative changes afoot that create too much uncertainty – and this may negatively impact your position.

Behind the scenesOne of our less visible activities is the amount of time we spend researching different investment options on behalf of our clients.We regularly meet with investment researchers and product providers to investigate suitable investments. And because 5 Financial is not tied to any financial institution, we are free to explore a wide range of options.Each potential recommendation is run through an exhaustive set of criteria, and many simply don’t make the cut.These are the ones you’ll never hear about from us – but it’s still crucial that we keep looking at plenty of emerging products so we can find the ones worthy of our recommendation.So when our advice to you is to ‘do nothing’, there’s good solid reasoning behind it. Just as there is when we make a specific recommendation to take action.It’s our responsibility to sift through the maze of options and weigh up the alternatives.In doing so, we can provide the guidance you need to make significant and ongoing improvements in your financial position.If you’d like to know more about our approach to helping clients enjoy financial clarity and peace of mind, please contact us.