Secrets to Successful Investing
Professional Investment Services
With
all the turmoil in investment
markets over past months, many
investors will
be asking if they have done the
right thing by investing in shares,
property or managed funds. Let’s
revisit two fundamentals of
investing.
Understand investment cycles
Investment markets move in cycles.
They go up, they go down and they
may run flat for a period of time.
However, if we look at the long-term
performance of investment markets,
they have historically trended up.
One secret to successful investing is to adopt a “counter-cyclical” approach.
Traditionally, human nature tells us to invest when markets are going up and to sell when markets are in decline. However, we need to change our mindset and invest when everyone else is selling (we pick up bargains that way) and sell when everyone else is buying. Alternatively and for longer term investments, we should be buying when markets are down and hold on to our investments for the long-term.
Time in, not timing
Long-term investing doesn’t involve
chasing the latest investment fad.
It involves making good sound
investment decisions with the aid of
professional advice and then
sticking to the plan, not jumping in
and out of the market every time
there is a change.
Everybody has heard of the October 1987 stock market “crash”. If you invested $10,000 in the Australian All Ordinaries Index in June 1987, the value of the investment would have fallen to just under $7,500 in October 1987. Many people were devastated by such a dramatic fall in the value of their investment and they sold out at the bottom of the market, thereby crystallising their loss. If they remained invested, they would have recovered their loss in around two years. Had they continued to remain invested for the next 20 years (to June 2007), their original $10,000 investment would have grown to in excess of $80,000.
