| LESSON 5 OF 6 |
In summary, Cash offers liquidity and security in the short term, thus, it is extremely vulnerable to the effect of inflation over the longer term. Equities can be volatile in the short term but the level of volatility in relation to the original investment may reduce in time. Middle ground adds "balance" and diversification.
In general, a mix of around 20% in Cash, 40% in Middle Ground and 40% in Equities often makes sense as this offers an overall "sensible" risk profile and adequate liquidity, whilst maintaining the potential for real growth of capital.
However, everyone has different needs, objectives and attitudes and the eventual portfolio must match the particular individual. Also much depends on the amount under consideration.
 
 
Detailed discussion on tax issues is beyond the scope of this piece but you really do need to be aware of tax. This is perhaps an area in which a competant adviser might be very useful to you. Most private investors will use "collective investments" such as Offshore and Mutual Funds, Unit & Investment Trusts and Insurance Bonds. You are now approaching the selection process and there are three things to consider here - Quality, Quality and Quality!
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