8 pearls of wisdom for investors
There’s a lot of investment guidance out there. Too much can be overwhelming. So, how can you cut through the noise and find what you need? To help you out, we’ve put together a cut out and keep 8-step guide to successful investing.
The list includes tips on how to manage your portfolio effectively - covering everything from diversification to saving tax efficiently - to help you build, manage and grow your investments with confidence and ease.
This may seem like an obvious tip but actually time in the market is more important than timing the market. We recommend you drip feed money into the market through regular investing.
Learn about staying invested in volatile times.
Assets respond differently to the same events. Maintaining a diversified portfolio across different asset classes, sectors and geographies may provide a smoother ride.
Learn about diversification and asset allocation.
It’s hard to not react to the headlines, especially when they’re gloomy. But remember that the market moves before the economy.
Investors don’t wait for the dawn to break, so don’t become more bearish as the market falls - instead it is preferable to be fully invested, ahead of the upturn.
Learn about strategies for long term investing.
Time matters more than how much you save. Investing in your twenties is supercharged compared to your fifties. An investor who hesitates for even a handful of years is unlikely to ever catch up with their more prudent friends who get on with it. The early starter can even stop contributing in later years and still end up with a bigger pot.
Learn about timing the market.
Every cent counts
There’s power in small amounts. Developing the habit of regular investing is more important than how much you can save.
Learn more about the benefits of regular investing.
Take the right risks
Risk is rewarded in the long run. For example, the evidence of the last 120 years or so is that shares outperform bonds and cash over long periods. Over 18 years or longer shares have never underperformed other assets so if time is on your side then give yourself the best chance by taking sensible risks.
Learn about how markets recover in the long term.
Invest when it feels hardest. Don’t follow the crowd. Be fearful when others are greedy and greedy when others are fearful. The best investment returns can be achieved when you swim against the tide, investing when most people are too anxious to do so.
What does Tom Stevenson wish he’d known about investing at 30?
Make the market work for you
Volatility is not the same as risk. Short term fluctuations are irrelevant as long as you intend to remain invested. What matters is when you crystallise a loss or a gain. Volatility creates opportunity.
Learn more about investing through volatility.
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