This month Mitch Hopkinson, a winner of the Financial Adviser, a Financial Times publication, ‘UK Independent Financial Adviser of the Year’ award, discusses investment planning.

I am asked often, which is the best investment? How can I make a really good investment return? The truth is, that the best investment return will come from 'high conviction' investing. What this means is finding an investment and putting a lot of your wealth in to it, because you believe that this will ultimately pay off. Unfortunately, this is not for the faint-hearted, and most people do not have the expertise, experience and knowledge to invest in this way. Nor should they 'risk' their hard earned funds in this manner. It means that you will have to put most/all of your eggs in one basket. This is of course a risky approach, as, should the investment not turn out as planned you will have lost a 'fortune'. History is littered with examples of those who have backed the next big thing, only to find that they had in fact backed a 'dud', and in the process they lost a fortune.

Therefore, advisers should advocate a portfolio approach to investing, this principle spreads your investment over a number of different asset classes. This is a sound approach as it ensures that you have your money in a number of investments that allow exposure to different assets, sectors, regions or indeed fund managers. The general concept here is that whilst not all of your portfolio can go up all of the time, the risk is spread so that your money can be exposed to assets that compliment each other. As advisers we talk about setting up a portfolio where investments are not correlated with each other so that the whole portfolio does not go up and down together. This helps to ensure that you will get a more suitable investment that is less risky than having all of your money in one stock. One stock, high conviction investing gives potentially stellar returns, but is much more like gambling than investing. So how should you go about making an investment? Firstly, you should assess what your investment goal is and what return you need to achieve - after all, if your investment goal requires only a modest return, why would you invest in a higher risk portfolio than you need to? In addition to this, you should also assess the level of risk to which you are willing to expose your money. Simply put, if you have a low appetite for risk, then do not invest in risky things. Having said that, if you have a longer period of time in which to invest over, then you can afford to be invested in assets other than the bank or building society, as, over time, riskier assets should give you a better real rate of return than investing in a comparable low risk portfolio.

It is really important that all investors, young and old, have a clear plan and review their portfolios on a regular basis. It should also be remembered that investing heavily in cash-based assets at the present time is a certain way to erode your capital, as inflation is currently higher than the interest rate most savers will achieve from cash.

Lastly, do not ignore marginal increments that will affect your investments. Aim to make your investments as tax efficient as possible. ISA, pension and capital gains tax allowances are very generous now and you should ensure that you maximise them to get the best 'bang' for your investment pound.

Mitch Hopkinson is a managing partner of deVere United Kingdom, part of the deVere Group, one of the world’s largest independent advisers of specialist global financial solutions to international, local mass affluent, and high-net-worth clients, through a network of 70 offices across the world and more than 1,000 staff. It has in excess of 70,000 clients and $9bn under advisement.