I recently came across a wonderful infographic showing 20 mistakes that investors make, and which they should try to avoid. It reminded me that sometimes we in the investing world talk down to retail investors, many of whom are way smarter than those actually in the investment world!
It also reminded me of a parenting tip I got once. That was to always encourage a child to do something in a certain way, as opposed to telling them what not to do! So, instead of saying ‘Don’t bloody drop that glass’, encourage them by asking them ‘show me how well and how carefully you can carry that glass over to the table’! The positive impact and chances of success are apparently far higher by doing the latter.
In an attempt to increase your chances of investment success, here are 20 investment tips (yes, just 20!) that I encourage Irish investors to try and do with their long term investing.
- SET SAIL WITH REALISTIC EXPECTATIONS: Chart your investment course with reasonable return expectations to navigate the financial seas with a steady, long-term perspective.
- DEFINE YOUR INVESTMENT HORIZON: Instead of chasing short-term market waves, steer your portfolio towards the North Star of long-term investment goals, ensuring a stable journey.
- ANCHOR YOUR PORTFOLIO WITH DIVERSIFICATION: Like a well-balanced ship, diversify your investments to avoid being tossed by the waves of individual stock volatility, maintaining a steady course.
- WEATHER SHORT-TERM STORMS WITH A LONG-TERM FOCUS: Stand firm against the short-term squalls by keeping your eyes on the distant horizon, preventing impulsive decisions that may rock your financial ship.
- SET SAIL WITH STRATEGY, NOT EMOTION: Hoist the sail of a buy-and-hold strategy, steering clear of the treacherous waters of emotional market fluctuations that can lead to financial shipwrecks.
- NAVIGATE WISELY TO AVOID TRADING RIFFS: Trim the excess sails of frequent trading, as navigating through choppy waters may result in a course deviation and hinder your overall financial voyage.
- STEER CLEAR OF HIDDEN ROCKS – WATCH YOUR FEES: Keep an eye on the financial depth to avoid hidden fees, ensuring your financial ship sails smoothly over the investment seas. Fees will rip your hull to shreds, and cause an awful lot of drag, slowing you right down. If DIY’ing expect to pay no more than c0.5%, if using an add-value advisor, you should pay no more than 1.5% or so.
- TACKLE TAXES WITH A STRATEGIC COURSE: While navigating tax waters, make decisions based on the overall investment map rather than solely steering by the tax wind, ensuring a smoother financial voyage. Irish investment tax situation is not as good as in some countries, but better than in others. It is what it is, so pick a plan and go with it. See Blog 159, Investment Trusts in Ireland, for more.
- NAVIGATE BY THE STARS: REGULAR PORTFOLIO REVIEWS: Like celestial navigation, regularly check your financial charts to ensure your course aligns with your goals, adjusting your sails if needed. You may occasionally want to rebalance your portfolio depending on your overall plan, and keep an eye on tax impact if you do it in non-pension assets.
- STAY AFLOAT AGAINST THE INFLATION CURRENT: Raise the inflation anchor to keep your financial ship afloat, factoring in historical inflation rates to maintain the real value of your portfolio, particularly over the long term.
- AVOID EMOTIONAL TIDES DURING MARKET FLUCTUATIONS: Steer through emotional currents with a rational compass, preventing your financial ship from drifting off course and experiencing losses.
- ADJUST YOUR SAILS TO THE RIGHT RISK WINDS: Find the right balance of risk winds, ensuring your financial ship sails smoothly in the comfort zone without being caught in a storm or left all-at-sea with no winds!
- SET A STEADY COURSE, AVOID TEMPTATION TO TACK: Maintain a steady course by staying in the financial market, as constant tacking (market timing) may lead to unforeseen waves and a less favorable journey.
- CAUTIOUSLY NAVIGATE HIGH-YIELDING WATERS: Before sailing into high-yielding waters, carefully assess your risk profile to ensure your financial ship can weather the potential storms. Unregulated investments have caused too many shipwrecks in recent times, avoid.
- CHECK YOUR NAVIGATION TO TRACK PERFORMANCE: Like a seasoned navigator, regularly check your investment charts, accounting for fees and inflation to ensure you stay on course towards your financial destination.
- NAVIGATE ADVISOR WATERS WITH DUE DILIGENCE: Check the credentials of your financial captain and shipmates, ensuring a smooth partnership with your advisor and/or providers as you navigate the investment seas.
- SET SAIL EARLY FOR A SUCCESSFUL JOURNEY: Launch your financial voyage early to catch the winds of compounding, ensuring a bountiful treasure at the end of your investment journey.
- STEADY AS SHE GOES, IGNORE MEDIA WAVES: Weather short-term media storms with a steady hand, focusing on the long-term positive currents of the historical stock market.
- CHOOSE A RELIABLE NAVIGATOR – SELECT THE RIGHT ADVISOR: Navigate towards success by carefully choosing a trustworthy financial navigator, aligning your goals for a prosperous journey.
- COMMAND YOUR FINANCIAL SHIP BY CONTROLLING WHAT YOU CAN: While market winds may be unpredictable, take command of your financial ship by controlling small contributions, steering towards a powerful financial outcome over time.
I hope this helps you or someone you care about with their own long term investment success.
Thanks for reading.
Paddy Delaney QFA RPA APA