Everybody is after the so called proverbial quick buck, and this maxim also applies to investments. One of Warren Buffet’s many pearls of wisdom is; “why is the stock market the only game in town where when there is a 30% mark down sale, nobody wants to buy, but when regular retail prices are marked up by 30%, everyone is rushing to get a piece of the action”.
Very few, if any, professional asset managers have the ability to constantly pick top performing shares or call the markets correctly on a consistent basis. Yet, many private investors feel that they have the innate ability to pick the big winner then back that pick to the hilt.
Investors should always have a plan and a strategy and then have the courage to stick to that plan, with regular rebalancing exercises. The plan should be formulated around the unique needs of the investor and take into account his wealth circumstances and the objectives he wants to achieve with the investment, together with an envisaged time period. If there is one piece of advice that Tony can give investors after his many years of experience, is “don’t be penny wise, and pound foolish, pay for quality professional advice from someone you trust”.
Research has proven that an appropriate asset allocation has the greatest positive influence on long term investment return performance than any other factor. An investment portfolio properly balanced between equities, bonds, property and cash with onshore and offshore exposure will over the long term beat a consistent attempt at get rich quick ad hoc punts.
Another important factor to remember is that if an investment product or promise is too good to be true, it is actually too good to be true. In a low interest low return environment, such as we are currently experiencing, consistent returns in the 30% and 40% range are impossible to guarantee or promise.
Investment costs and structures should also be monitored to ensure that they are in place to compliment the investment strategy and not so costly that they drag the overall performance down. Tax consequences should never drive investment strategy, but cognisance should always be taken of the tax effects of investment decisions.
A good investment strategy will always blend all of these factors together which will ensure that the portfolio will deliver on its objectives.
Let Tony advise you on the investment strategy that optimizes your portfolio’s potential.