When you’ve spent years building up your hard-earned wealth, it pays to spend a few minutes brushing up on ways to protect it.
That’s why we created this blog. It explores common threats to your wealth, and importantly, the shields and mindset you’ll need to protect your finances for future generations and keep your Financial Fortress’ walls watertight.
WHAT SHOULD BE ON YOUR RADAR?
Humans aren’t wired to be good investors. We’re emotional creatures, prone to short-termism, knee-jerk reactions, and a magpie-like attraction to the ‘opportunities’ presented to us in the shiniest way.
When these opportunities relate to investments, we should first question how reliable the source is? If an investment opportunity is so sure-fire, why would anyone share it en masse, through something like a sponsored social media advert? Are there other motivations at play?
News outlets are another big factor in investment mishaps. If the stock markets are falling, it’s front-page or prime-time news. If they boom or rebound, nobody wants to cover it, because negativity sells, grabs attention and drives clicks.
The stock markets have proved their resilience time and time again. Even after the pandemic they bounced back relatively quickly. Strong returns are there for the taking for disciplined, patient investors, and patience is key because these returns can come in very short bursts of time.
The S&P 500 is one of our favourite examples. If you invested $1,000 between 1990 – 2021, you’d have come out with $26,322. However, if you missed the 25 best-performing days over that period, your returns would fall to $5,632.
Source: Dimensional Fund Advisors, “Reacting can hurt performance” – S&P 500- Index 1990 – 2021
SHIELDS & MINDSET
It can be tricky to keep your emotions at bay and take a long-term view of your investments, what with media sensationalism, social media noise and investment ‘tips’ seemingly everywhere.
But, the stock markets are tough to beat. Always have been. Always will be. And by focusing on the long-term – your ideal lifestyle and the things you really care about – and avoiding the temptation to try and time your movements in and out of the stock markets, you’ll be in a much better place to bring those goals to fruition. That’s why controlling your emotions is one of our six key investment principles. It’s also why legendary investor, Warren Buffet said “Investing is easy; but staying the course is much harder to do.”
If you’ve any questions about how we can help you keep your financial walls watertight, we’d love to chat.
Past performance can’t guarantee what investments will do in the future. The value of a portfolio can go down as well as up, so there’s a chance you’d get back less than you put in. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action.
