How to Tailor an Investment Strategy to Suit your Lifestyle

financial strategyWhile there’s plenty of doom and gloom surrounding the UK economy as Brexit negotiations continue, investors can still leverage British assets to their advantage. The UK stock market could be poised for a strong rebound during the second half of 2019, for example, while currency speculators can also hedge against the pound as it continues to trade in an ever-depreciating range.

Make no mistake; the UK financial market has never been more accessible or diverse, and there are ample opportunities to make hay even in a depreciating market.

The key is to tailor an investment strategy that suits your unique circumstances, from the philosophy that drives you to your underlying appetite for risk. It’s also important to factor in your lifestyle, and here are some of the key considerations to help you achieve this aim:

  1. What Assets Should you Trade?

Not all assets have been created equal, particularly in an increasingly diversified and constantly evolving financial marketplace.

This means that you’ll need to choose carefully when constructing your portfolio, as you must prioritise assets that suit your lifestyle and potential trading schedule.

If you already have a day job and want to trade as a way of supplementing your income, for example, you may want to avoid the stock market. After all, the London Stock Exchange usually closes at 16:30 during weekdays, meaning that you’ll need to strategise and execute orders while also attempting to fulfil your normal job role.

The same cannot be said for entities such as the forex market, however, which is open for 24 hours and six days a week across three separate trading sessions. As a result, you can access your account, analyse the market and execute orders in the comfort of your own home, without feeling rushed or unnecessarily conflicted.

  1. How Should you Trade?

In many ways, your chosen methods of trading will be influenced by the assets that define your portfolio. Currency is a derivative asset, for example, meaning that traders do not assume ownership of the underlying financial asset and can leverage vehicles should as spread betting to profit in a depreciating market.

Similarly, it’s fair to surmise that most modern traders will utilise online or mobile trading platforms to build and manage their portfolios, particularly as these hubs are also the go-to source of historic and real-time data analysis.

However, your lifestyle may also influence how you invest your capital. In the case of busy or casual traders, for example, automated trading platforms and algorithms can be used to oversee your portfolio and create a managed form of passive income.

Conversely, those who want to invest as a primary source of generating income will prefer to take a more hands-on approach, by building manual portfolios and executing orders independently in real-time.

  1. How Much Disposable Income do you Have?

As a general rule, your lifestyle will also be dictated by your approach to spending and how much disposable income you have each month.

It’s therefore important that you tailor your investment fund to suit your disposable income, as you look to operate within your means and only encumber losses that you can easily afford.

Individuals with minimal capital and a risk-averse approach should avoid derivative assets that deliver margin-based returns. The reason for this is simple; as these assets can generate gains and losses that are far higher than you original investment.

These individuals should also deploy effective risk-management measures, such as the use of stop-losses that automatically close positions once they’ve absorbed a predetermined amount of losses.

Conversely, individuals with larger amounts of disposable income and a healthy appetite for risk can look to embrace margin-based product, while also leveraging short-term market trends to execute a high volume of orders in a relatively short space of time.

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