Australian’s are well known for our seemingly universal stance of she’ll be right. She’ll be right has gotten Aussies both into and out of a lot of mess. It’s our belief that it’ll all work out, just have a go. At Priority Financial Advice we see the impact of ‘she’ll be right’ on financial decisions and it often leads to some pretty poor decision making. To help we wanted to provide our top tips for investing.
Always have a strategy.
There is a massive difference between the suitability of an investment if you’re looking for a 6-day return or a 6-year return. Know what your strategy is and execute it. If you bought a house because you could remodel and resell it, then remodel and resell it. If you bought shares in a company because you’re convinced it’s going to be a significant growth company over the next 3 years, hold it for 3 years. Have a strategy and stick to it.
Ignore the media
Do you remember how bad Brexit was going to be for global markets? Or do you remember how Trump was going to be the end of the world? Unfortunately fear is one of the most powerful and primal motivators of the human race, so if a media outlet can scare you, you’ll read their articles and they’ll make more money. Being told that the world is ok just doesn’t sell, so ignore the media (or at least be highly selective in what you read/listen to).
If you can’t explain what it is, don’t buy it
Until you’ve done enough research to be able to explain what that investment is and how they make money, you shouldn’t buy it. It doesn’t matter how good your mate told you it was going to be. It doesn’t matter what the guy at the seminar told you. Do your own research.
It’s an obvious tip coming from a financial adviser, but almost my entire job is talking people in to good choices and out of bad choices. I help clients understand their goals, what they need to achieve those goals and what’s the least amount of risk they can take on to achieve those goals.
Don’t try to time the market
Good luck. We’ve heard too many stories of people losing out by selling towards the bottom of the GFC and not buying back in at all, or buying back at a much higher price later on. I can count on one hand the amount of people who have been able to do it successfully – literally one person. The market is a fickle beast and often moves in directions it wasn’t predicted to (see above: Brexit, Trump). Historically the best investors have held for the long-term and continued to add regular contributions to their investments.
People often think they don’t have enough to invest, and the people who think that way never seem to find enough to invest. Those who choose to invest, and work hard or save hard to do it will build considerably more wealth over time.