Good luck has very little to do with good investing. Our top ten tips can help you make the right decisions with your investment strategy.
1. Don’t try to second-guess markets - share values reflect the views of millions of investors - out-smarting the market is virtually impossible. Aim to work with it instead.
2. Speculating is not investing - speculating involves concentrating large amounts of cash in a handful of stocks on the assumption their value will rise rapidly. Very few people consistently make money this way.
3. Invest for the long term - invest in quality assets, and any short term market dips should be outweighed by long term growth.
4. Know what drives returns - different types of investments have different levels of risk, i.e. are more volatile. The higher the risk, the higher the return. However there is also a higher risk of experiencing a negative return.
5. Diversify your investments - spreading your money across different investments reduces portfolio risk and smooths out long term returns.
6. Avoid market timing - holding a diversified portfolio offers a far greater likelihood of healthy long term gains rather than trying to pick each year’s winner.
7. Don’t let emotions cloud your thinking - investing on the basis of emotions often leads to buying when prices are high and selling when prices fall – two steps that can significantly reduce long term returns. It makes more sense to develop a personal plan, and stick with it.
8. Disregard media headlines - news stories tend to focus on short term events, creating a distorted view of markets. Read the news, but don’t let it form the basis of your long term plan.
9. Be mindful of costs - fees and charges will eat into your returns. Keep an eye on how much an investment is costing you.
10. Focus on what you can control - none of us can control investment markets. Focus on what you can control - building a portfolio that reflects your personal goals.
Expert advice can go a long way when deciding on an appropriate investment strategy. I’ll take into account your life stage and appetite for risk to develop an investment strategy that suits you. As part of our ongoing relationship, I'll also make sure your strategy keeps up to date with your changing lifestyle and investment goals.
If you have any concerns or want to review your investment strategy, don’t wait for an annual review – contact me so we can arrange a time to discuss.