At Nutmeg, we make investment decisions on your behalf. That’s what we call ‘discretionary’ investment management. At the same time, you have the freedom to withdraw your money whenever you want, at no cost. But knowing when to review your Nutmeg account is crucial. Making frequent withdrawals or other account changes for a short-term fix to your finances can seriously damage the long-term net returns you’ll get on your investments.
Great – you’ve invested with Nutmeg. You’ve set up your profile, put in your money and you can see that we’ve built you a tailored portfolio that aligns to your financial goals. Now what? Easy… Sit back and relax. Enjoy it. Let us do the hard work.
At least, it should be easy. But not everyone finds it so. Therein lies an inherent danger.
A watched pot never boils
You’ve all heard the saying, right? We are creatures of the most peculiar habits. Whatever’s front of mind gets our intense, unwavering attention. That’s why some investors, whether it be with Nutmeg or elsewhere, are compelled to constantly track their returns in the first few weeks and months after making an investment, forever itching to tweak it and reshape it.
It’s a natural enough reaction but it can be incredibly damaging to your net returns if you meddle with the risk setting in your Nutmeg profile at every sign of an upturn or downturn in market prices, or if you use it like a bank and take small chunks of money out to pay for a weekend away, a new sofa, or a spontaneous shopping spree.
Slow growth, managed risk
At Nutmeg, we’re not in the business of day-trading and making high-risk investment decision for the chance of a quick high-rate return. We’re all about long-term, intelligent investment planning. We spread your money across a range of different investment assets and regularly review that mix to make sure we manage your risk, keep your portfolio on track for the long-term goals you want to reach, and do all of this in a sophisticated, strategic manner.
Many complex algorithms and decades of great investment experience go into making the best investment decisions we can on your behalf. Withdrawing the odd £200 here or there, or frequently changing your risk setting, will simply disrupt a lot of the intelligent thinking and layered processes that have contributed to your portfolio set up and ongoing management. In turn, that will likely cause a drop in the potential return on your investments.
It’s understandable that some investors may tend to react more to a short-term decline in their investments than a short-term rise. The decline can cause alarm and trigger a change whereas a rise is likely to mean we’ll give a satisfied smile and leave everything as it is.
Some investors are also more likely to react to more frequent and short-term reviews of their investments than long term, infrequent reviews. If we get a daily statement of our accounts, we may hone in on just that one price movement and look sternly at any factors to have caused it. If we get a monthly or annual statement instead, we can review numerous price movements, both up and down, with a wider lens, with more context of the various influences over that period.
Life’s big changes
At times, your life circumstances will of course change. You may have another child, move home or jobs – or even all three in a short space of time. At such times it’s only right to fully review your investment plans and make any changes you think necessary to marry up to your new long-term financial goals. We’ll also send you an annual reminder to review the core information in your profile and the goals you’ve set up, to check everything is still in sync with your life plans and personal circumstances. Any changes you make, Nutmeg will re-assess your profile and line up your portfolio accordingly – all at no extra charge to you. We help get your investments on track with the targets you’ve set for later life.
So rest assured, we’ve got this. There’s no need to watch the pot. Go and enjoy your life.
Risk warning: As with all investing your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. Past or future performance indicators are not a reliable indicator of future performance.