Five practical investment actions from BlackRock

1 Consider the Cost of Cash

Many investors have parked their money in cash because of the instability and uncertainty of today’s markets. Holding some cash to take advantage of new investment opportunities is wise and over short time frames may be a sensible decision. But holding too much for too long is no way to save, given the erosive effects of long-term inflation. No matter what your long-term objectives are, you need to consider strategies that go beyond cash to achieve them and preserve the real value of your savings.

2 Go Further for Income

For years, investors have often relied on low-risk government bonds as a source of income. However, with yields near historic lows, you must look across a range of investments to better manage your income stream. Some dividend-paying shares are delivering twice the yields of benchmark government bonds. Or you can seek out higher yields in corporate and high-yield bonds and emerging market sovereign debt.

3 Open Your Eyes to Alternatives

Today, unit trusts and exchange traded funds (ETFs) offer access to asset classes often considered the preserve of institutional investors, such as property and infrastructure. These products can help investors to diversify their risks and invest more efficiently.

4 Be Active About Passive

Passive investing has long been recognised as an efficient and low-cost way to invest. Investors can combine passive investments — such as index tracker funds and exchange traded funds (ETFs) — with active investments to form the bedrock of the dynamic portfolios needed today.

5 Use Your Longevity

Many people worry they will outlive their capital. Realising we are going to live longer allows us to expand our investment horizon well beyond the day we retire. Today’s 50-year-olds can consider investments with a 25-year time horizon to keep generating returns over the long term.