Product providers may lure investors with the promise of glittering returns and market outperformance. In reality, only a few achieve this. We believe investors are better served aiming for realistic and consistent long-term investment returns.
What is a reasonable goal for your investments?
The answer for many investors is market returns aligned with their risk profile. Understanding your risk profile is the cornerstone of constructing a suitable long-term investment portfolio. Conversely numerous academic studies have shown that aggressive strategies chasing returns and the latest ‘hot stocks’ very rarely beat the market.
These mistakes can reduce investment growth. Aiming for market returns is a good starting point when building wealth. Deciding which markets to invest in is also essential and stick to your investment strategy. Many investors take inappropriate risks, investing in products they do not fully understand, make hasty decisions when stocks experience sharp swings, and they pay too much in fees.
You can be more successful with your investments by avoiding common pitfalls, we recommend:
Have an investment plan for the long term and stick to it. Your strategy must be tailored to your goals and objectives, risk profile and time horizons. Start investing as soon as possible.
Diversify and always consider your investment as a whole: Know what you are buying and understand it thoroughly. Select high-quality funds for your portfolio while being mindful of costs. Indexed tracking funds may offer transparency, low costs and close to market performance for the index they aim to replicate.
Review regularly: Review your risk profile at least annually or whenever there is a change in your financial or personal circumstances. You may need to rebalance your portfolio to adjust different asset class weightings back to your long-term strategy possibly with expert help.
The best investment is advice: If you would like to potentially boost your long-term investment success, please contact us to conduct a review of your portfolio.
By Philip Harper | July 2021