While share markets are performing well it’s easy to sit back and watch investments rise in value.
However, it’s a different story when markets are not performing so well, and uncertainty abounds. Holding your nerve is not easy.
So how do experienced investors handle this? Here are our nine rules of investing:
1 – RECOGNISE THE CYCLE: Financial markets are all prone to move in cycles. Sometimes the troughs feel like they will last forever but they do eventually end and move on to higher levels.
2 – DIVERSIFY: One of the most important rules for successful investing. Diversify across asset classes, markets, geographical regions, managers or companies.
3 – AVOID CROWDS: The worst time to invest is when everyone else is rushing in. Become a contrarian investor whilst still applying fundamental quality analysis.
4 – BUY & HOLD: Buy quality investments and hold them – at least until they have had time to achieve their expected return. Very few investors make money through speculating.
5 – THIS TIME IS NOT DIFFERENT: When the market moves dramatically up or down there is a tendency to cry “this time it’s different”. This time is definitely not different.
6 – DON’T BE SWAYED BY HIGH RETURNS: Don’t chase last year’s winners – look for this year’s opportunities.
7 – INVEST REGULARLY: Implement a disciplined savings plan often referred to as “Dollar Cost Averaging” – a little bit often, while markets are depressed will build up to a lot in the long run.
8 – CONSIDER TAX IMPLICATIONS: If you are a wealth builder, seek capital gains in preference to income. If you need income, investigate different structures that help to minimise tax.
9 – REVIEW YOUR PORTFOLIO: Review your investments and your strategy on a regular basis. Working with professional financial advisers Justin Mulcahy & Ray Lenton, can help you achieve your longer-term financial objectives.
Intrinsic Private Wealth specialise in providing financial advice to Australian investors. With over 20 years of experience in the finance & investment industry.
General Advice Disclaimer: Information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs. Intrinsic Private Wealth has financial advisers that are authorised to provide personal financial advice. Call 02 9615 4500 for more information on our available services.