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Investment Principles for Success

“We don’t believe in get rich quick schemes and we don’t have magical investment formulas. Our 10 investment principles are based on years of experience and successful implementation which we use for ourselves and with our clients.”


Have a plan and set some goals
Everyone wants a great rate of return, but how should your investment strategy be designed? It should ensure that it assists you to: a) provide an income and/or b) grow to ensure you increase your chances of achieving your financial goals. Start with the end in mind and know what you are trying to achieve.

Establish your timeframe
Having a good sense of how you want to use your money, when you want to use it and how much your need drives much of the decision making. For example, don’t invest in shares for a quick gain if you will need the money in 12 months. The intended quick gain could actually be a quick loss. If you can stay invested for 5-6 years then the risk of short term volatility diminishes with the longer time frames.

Determine your tolerance to risk
Almost everyone was happy to be an aggressive investor prior to the GFC, but realised their attitude to risk was different when markets fell. Ensure your investment choices reflect your tolerance to volatility and risk.

Focus on quality and be patient
Invest in things you know will be there tomorrow – a great quality share portfolio or investment property. Sensible and controlled investing is not gambling, but speculative investment is. Stick with quality and be patient – you will be rewarded in time.

Resist the temptation to follow the herd
For many, investment decisions are based on their emotions at the time – commonly they are fearful (in falling markets) or greedy (in rising markets). Following the herd or making snap decisions based on emotion is a recipe for disaster. Warren Buffet (renowned US investor) commented during the GFC that he believes investors should “be fearful when others are greedy, and greedy when others are fearful”. Set your own goals, run your own race and try to screen out the background noise. Make rational and factual based decisions where possible – a great adviser will assist with smart decision making in times of market volatility and uncertainty.

Invest regularly
Having a process to invest smaller amounts on a regular basis reduces the chances of a poor decision to invest large amounts at the wrong time. It also creates a mindset and attitude that successful investing is a commitment to a process – don’t fall into the trap of making a series of one-off random decisions.

Never over commit with debt
Borrowing to invest can be a good way to increase your wealth over time, but ensure this does not place unnecessary pressure on the family finances and require that you compromise your lifestyle and can’t afford to enjoy yourself along the way. If your goal is a bad marriage and poor health, placing unnecessary financial stress on yourself is highly recommended!

Never over commit with investments
Ensure you have an emergency cash supply. For retirees we work with cash balances and cash flow to secure their income needs for at least 2 – 3 years. Ensure a portion of your investments are liquid and can be sold quickly if the need arises (term deposits are handy for this). But importantly make sure you never have to sell if markets are low and the timing not right. This sounds simple, but often takes careful planning.

Do something, as soon as you can
Commencing your investment strategy as early as you can allows you to build the foundations of future financial success. Even while markets are low and there is a chance of further declines, if you are disciplined and patient, you will reap the rewards when markets recover.

Get advice
Those that are financially content and successful get advice. This is because if you have the right adviser that is not just selling you a product, but takes an interest in you and your family’s needs and provides quality advice about your financial strategy and structures (including investment advice that is in your interests), then your chances of achieving financial security and the things in life that are important to you, increases dramatically.

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