Our Investment Philosophy

At Suitable Life Planning, we hold some core investment beliefs:

  • We believe that you should fully understand the differing types of risk and which ones are involved in your specific investments. You should also fully understand your attitude to risk, your need to take risk and your capacity to withstand loss /li>
  • We invest for the long term and do not let temporary volatility cloud our judgement or make us panic and cause permanent loss (we stay invested - in whatever type of asset)
  • We cannot predict what markets will do but we can control the costs of your investment
  • We use an evidence-based approach, which shows that the extra cost of actively managed funds are not justified as they do not consistently give greater returns.
  • We believe that equities should play a part in most people's investment allocation via low-cost, diversified "passive" funds – we use an evidence-based approach
  • We believe that for many clients, property should also play a part in their investment allocation

There are four main types of asset:

  • Cash - e.g. a savings account with a bank or building society
  • Bonds - e.g. a loan to the government or a large company
  • Property - e.g. residential or commercial property
  • Equities - e.g. shares in companies such as BP or Vodafone

A general rule of thumb is that the riskier an asset is, the greater return you'd expect to earn from it, over the long term (longer than five years).

  • Cash - generally considered the safest asset, but also likely to give you the lowest return over a period of several years or more
  • Bonds - slightly more risky than cash but normally generate roughly the same level of long term returns
  • Property - tends to do well over long periods and the returns are quite stable, albeit residential & commercial are very different assets
  • Equities - the returns vary the most from year to year, but tend to be the highest of all over long periods

Here is the average annual return for cash, equities and property over a 30-year period (1985 to 2014).

Over a similar period, gilts (these are the main type of bond in the UK, figures taken from the Equity Gilt Study produced by Barclays Capital) returned about 3.6% per annum.

1985 - 2014
Return in 2014
Sum Invested
% Change
Halifax Residential House series
£ 5,02,455
£ 1,00,000
Uk Equities (Total Return)
£ 15,33,381
£ 1,00,000
UK Equities (Capital Only)
£ 5,32,990
£ 1,00,000
£ 2,67,430
£ 1,00,000
Base Rate (Reinvesting Interest)
£ 5,38,459
£ 1,00,000
Base Rate (Interest Only)
£ 2,75,500
£ 1,00,000
 Growth trends: UK Equities outstripped other asset classes, as long as you steadily reinvested dividends (Source: True Potential)

Let's look at the returns assuming no dividend re-investment for equities and no interest re-investment for cash

  • Equities - average return of 5.9% pa
  • Property - average return of 5.7% pa
  • Cash - average return of 3.6% pa
  • Gilts - average return of 3.6% pa

So, if you'd invested £100,000 in each of these three assets thirty years ago

  • Equities - value of £532,990 after 30 years
  • Property - value of £502,455 after 30 years
  • Cash - value of £275,500 after 30 years
  • Gilts - value of £275,500 after 30 years

Therefore, investment in equities comes out the winner over the past 30 years and is significantly ahead if all dividends are re-invested.

The return on property only takes into account its increase in capital value. It does not take into account the rent received by a landlord, but neither does it take into account money required to be spent on their upkeep.

We believe that equities play a part in most people's investment allocation.

We also believe that for certain clients, property should also play a part in their investment allocation - albeit this could be as a passive property investment or as a more active, business-focussed property investment.