Tips for successful investing
We are living in uncertain times and so we thought it would be a good idea to go back to basics. Whilst rises and falls in the markets are inevitable, here are some tips for a successful investing experience.
What’s good for the goose, is not necessarily good for the gander.
Don’t copy someone else’s investments. Just because an investment works well for somebody else does not mean it is right for you. You must consider your own situation and then make your investment choices. Remember that short term investment success is down to luck not skill – there is no crystal ball of investing
The tortoise not the hare
Short term trading is a losing strategy. Not only do you have to time the markets twice – going in and coming out – but it’s an expensive pastime when you take into account trading and transaction costs.
Fools rush in where angels fear to tread
Buy low, sell high. If an investment has risen in value you may have already missed the gains on offer. By buying an investment that has risen sharply you are almost certainly buying high and the investment only has one way left to go.
Look before you leap
If you do not understand an investment do not invest your money into it. Some investments may sound exciting but remember if it seems to good to be true, it probably is.
Risk and return are related.
Investments with a similar risk will offer a similar return. From this you can infer that investments with different returns have a different risk. High return investments are high risk.
Love is blind
An investment has no knowledge that you own it – nor does it care. Don’t get emotionally attached to investments – it is never reciprocated. Maintain the same discipline as you did before you bought it and sell it with a clear conscience.
Mighty oaks from little acorns grow
Over time, your needs and circumstances can change. The markets can also change – and your portfolio may need the odd tweak to make sure it keeps up. Review it regularly – annually is good – and make sure it stays on track.
No news is good news
Bad news sells. You rarely see headlines that the markets have risen sharply and that billions have been added to investments and pension funds. Make sure you add a healthy dose of cynicism to everything finance related that you read, see on the TV or hear on the radio. Sometimes it can be difficult to filter out the white noise. This is where help from a suitably qualified adviser can come in very handy to ensure you are making the most of your investment resources.
A rising tide lifts all boats
Bubbles are created when the public get sucked along in the euphoria of an investment that will continue to increase in value forever. Of course this never happens. Many investors jump on the band wagon because they do not want to miss out. It is hard to turn against the herd but always take a step back and think not just about what you are buying, but why.
At Proposito one of our roles is to protect our clients from themselves, maintaining a disciplined approach to investing when their emotions are taking over. If you would like to find out more about how our investment discipline can help you please do get it touch.