7 November 2025
It’s never easy to face a low investment return. As investors, we naturally expect our money to grow – not to reach maturity only to deliver meagre returns or even losses.
Even well-considered investments can experience periods of underperformance. Let’s consider why this happens, and how you can “fire-proof” your portfolio for the long term.
Why investors sometimes experience low returns (even when doing everything right)
Every investment involves some level of risk. The level of risk that you are comfortable taking depends on your age, goals, personality, and how long you plan to invest.
Different investments come with different risks. Understanding your personal risk tolerance helps your financial adviser design a portfolio that matches your financial needs and objectives.
Even if you invest according to your risk profile, there will be times when your returns are lower than expected. This happens because financial markets are unpredictable and move up and down daily. The value of your investments can fall in the short term, but what matters most is your long-term progress.
Short-term volatility is normal and often temporary, while long-term investing gives your portfolio time to recover and grow.
How to fire-proof your investments
- Work with an authorised financial adviser
Partnering with a qualified adviser helps you set clear investment goals and build a well-rounded financial plan. Given that we are often emotionally attached to our money, having an experienced, objective professional can make a big difference in navigating complex financial decisions.
- Choose an adviser who understands you
Your adviser should take time to understand your lifestyle, priorities and financial circumstances. A good adviser explains your investment options clearly and ensures every recommendation aligns with your goals. Ask as many questions as you need to as there are no “stupid” questions when it comes to your money. Make sure you understand the risks, potential returns, liquidity, and tax implications of each investment.
- Diversify your portfolio
Diversification is one of the best ways to manage risk. This means spreading your investments across different asset classes (such as equities, bonds, and cash), industries, and regions.
You may also consider blending traditional investments with products that offer capital protection or fixed returns. These can help provide stability during market downturns, though they typically offer lower returns and may limit access to funds before maturity. Striking the right balance between safety, growth potential, and liquidity is key.
- Understand the type of solutions you invest in
Financial services institutions provide a broad range of investment products that include traditional asset classes such as equities, bonds, and cash, as well as more specialised instruments like structured products and exchange-traded funds (ETFs). The choice of investment solution should be guided by factors such as risk and return characteristics, liquidity, and tax efficiency.
For instance, structured products can deliver uncorrelated risk and return profiles, thereby enhancing portfolio diversification. When these are held within endowment policies, they are subject to liquidity constraints (i.e. they have a restriction period) and can offer additional tax advantages to investors.
- Stay invested for the long term
Investing is a long-term journey that requires patience, discipline and trust in the investment strategy, despite experiencing temporarily low returns. Diversification should extend beyond asset classes to include different sources of return.
Regularly reviewing and rebalancing your portfolio keeps it aligned with your goals. When an investment matures, consider reinvesting your capital to keep it working for you. With guidance from your adviser, this approach can enhance your long-term results.
In closing
Short-term market dips and low returns can be discouraging, but they are a normal part of investing. By working with a trusted adviser, diversifying your portfolio and staying focused on your long-term goals, you can build an investment strategy that weathers volatility and delivers growth over time.
