Having money to invest for the first time can seem pretty daunting; the whole subject might appear to be one best left to those with the Midas touch, but really nothing could be further from the truth. If you follow some basic principles, avoid some common mistakes (which are often made by even the so-called experts) and apply a huge dose of common sense you will be set fair and just fine.
Here, in brief are some of those basic principles and some of the main things to do as well as don’t!
- The old chestnuts are the old chestnuts for a reason, they are proven to hold thick and thin through all seasons. Such things as “look after the downside and the upside will look after itself”, “something that looks too good to be true probably is” and “no-one knows what is going to happen” are true in all cases, all of the time.
- There are no magic formulas; never have been, never will be. Investing doesn’t work like that, avoid anyone who tells you any different.
- You will almost certainly need and want help when it comes to investing – spending time and giving attention to who you work with and what support you need is likely to be more important and have a greater impact on your future results than anything else. Pick your team to help you with the greatest care.
- Remember that even seemingly small differences in yearly investment returns can add up to huge long term differences in future monetary value. Stretching your return, even if it is by marginal amounts can and will add up handsomely. This means paying attention and striving to find the best risk/reward investments you can.
- Returns on monies you invest are inevitably going to be linked to risk taken. Many people do not spend any time measuring risk, simply looking at return, one cannot be considered without the other. Understand the risk you can take, measure it and then invest accordingly.
- Any and all money earmarked for your future should be part of your investment strategy. For some reason many people often ignore certain pots as if they were something separate. For example, if you have money in a Workplace Pension scheme this is much a part of your future prosperity and requirements as money you have in other savings areas.
- How successfully your invested sums perform will almost certainly be determined by your top level asset allocation strategy. Not by fund selection, or timing of when you invest. Many people seek out the best ‘companies’ or the best ‘funds’ aiming to find individual winners or star performers. Or they try and ‘time’ when they buy into or sell out of investments. However, the biggest differentiator will be the chosen asset areas, whether you choose shares, property or bonds and the geographies attached to these. Then it will be down to how you mix these up (the proportions in each) and how well this is managed into the future.
- Your asset allocation strategy is the key and you should find a strategy which works for your situation and then use this proactively.
- Don’t be fooled into thinking there are any exceptions to these basic principles, if someone offers you a special investment or something unique which is promised to be a sure fire winner, ignore it. It is worth remembering that if there were such a thing, the seller of the investment would not be sharing it with you!
- Successful investing is about following a series of steps which produce steady results, which can compound over the years into handsome returns. There really is no get rich quick way to invest which does not involve exceptional speculation. Traders speculate and seek out short term profits; investors risk manage and seek out solid long term returns.
Of course, ultimately, having help and support at all stages of your ‘investment life’ will always make sense provided that it comes from a trusted and experienced source.
At Penguin Wealth we don’t claim to be investment gurus who know something no-one else does. What we do know is how to go about investing and helping our clients with successful investing strategies. We know how to avoid the common mistakes and get the right principles in place and then how to manage the process over the years and through all evolving circumstances.
If you would like to get in touch with one of our specialist investment advisers please fill in the form below.
Alternatively, you can read about this subject further in our book, The Wealth Secret, which is available on Amazon here.