Investing for success; the key rules

By Frank Conway

With the stock markets roaring ahead, US Republicans planning a major tax overhaul, UK authorities increasing interest rates and North Korea staring down the US and it’s allies while Saudi Arabia ratchets up the rhetoric of war, uncertainty reminds us that it never went away.

When planning for long-term financial well-being, it is important that you keep a few simple rules of investing in mind. Those are:

  • Invest according to your goals. Take a careful look at your portfolio, and ask yourself if your overall long-term strategy is sound. Do you have the right asset mix for your investment goal and time horizon? Are you properly diversified?
  • Focus on the big picture. Your investment decisions should always be strategic and not based on whether the market is up or down. Step away from the news, and ask yourself, does this event change my investment goals?
  • Rebalance. Disciplined rebalancing is vital to achieving long-term goals. It keeps your investment risk in check with your long-term plan.
  • Save more. Putting away something extra every opportunity you get isn’t easy, but it can give you the flexibility to get through tough situations.

Investing and wealth growth are a long-game. Short-termism can seem the right move when events become rocky but those short-term reactions are more likely driven by emotion and not reason. Time is the great healer, provided you diversify and rebalance on an ongoing basis.

Fees really do matter – yes, this is the key to long-term investing success. Reducing management fees to a minimum will result in higher growth rates and faster wealth accumulation. Remember, ask what your overall charges are, you can ascertain this using the TER or OCF measure. The lower your overall fee structure (not just the AMC) the more money you should have in your portfolio, provided you follow my four simple rules laid out above.

Best of luck growing your personal wealth!


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