Goals play a significant role in investing, and we tend to aspire and make plans to ensure that our future is secured. But, what about the possible short-term needs which may pop up unexpectedly?
How does your portfolio react to something that is unexpected?
Do you need to change your car after an accident or take a vacation to rejuvenate the mind?
Do you have enough funds to cover your family in an emergency?
Investors should think to prepare and ensure that their portfolio offers enough diversity and liquidity for any possible situation. One may ask, what are the other options to assist with short-term goal achievement? In consulting with your financial advisor, you may discuss the inclusion of Collective Investment Scheme (CIS) as this may be another avenue that allows investors to have short-term cash and, in some cases, increased returns.
CIS can take various forms such as a cash-like fund that is usually high value earning with little to no risks and short maturity periods. If we take a step back and assess our needs, ad hoc situations will require access funds that may be tied up. With a fund like CIS, investors can withdraw at any time without any associated penalties or losses.
All fees associated with these funds are usually lower and less complicated than other types of investments. This equates to more cash in hand for optimal use as dividend earnings are always up to date.
On the flip side, the low risks associated with these funds often results in higher interest rates over its maturity period which may provide solid returns. However, this might not be a viable option for younger conservative investors. Yes, funds boast liquidity, competitive rates, low fees, diversity and stability but can all investors sustain it?
When in doubt talk to your financial advisor about the possible options to meet your goals as these short-term investments may erode the overall quality of your portfolio by stifling growth in other areas, that is; limiting capital injection to your other investments to supply funds to these funds for a quicker rate of reaction.
Be cautious in deciding!
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