Investor Principles – Keys to a successful investment experience

Follow these Investor Principles and you will maximise the probability of achieving everything that is important in your financial life.

  • I am an investor. I do not trade my assets frequently – that’s speculation, not investing.
  • I am also a saver, fuelling my investments with continuous savings from current income.
  • I know that every kind of asset entails risk – even cash, which can be eroded by inflation.
  • I know that higher returns entail higher risk, in every kind of asset.
  • I accept those risks, but I mitigate them by owning a diversified portfolio of assets.
  • I regard my home as a place to live, not as an investment. It is not a substitute for retirement savings.
  • I have an investment plan and an asset allocation strategy.
  • I invest regular amounts every month, in both rising and falling markets. I know I cannot time the market highs and lows. If I receive a windfall; a bonus or gift – I gradually feed it into my regular investment mix.
  • I don’t pour more money into hot markets nor completely cash out of plunging markets.
  • I spread my investments among several asset classes, in a mix fitting my timeframe and tolerance for investment risk.
  • I rebalance my portfolio every year. If the stock market plunges, pushing my equity allocation way below its target percentage, I sell bonds and use my cash to buy equity-backed investments.
  • I force myself to sell high and buy low something that is intuitively difficult for most private investors.
  • I know that equities are risky in the short run, so I hold in equities no money for which I have a likely need in the next five years.
  • I accept that equities are less risky in the long run. They have out-performed all other commonly traded assets over periods of 15 years and longer.
  • Foreign equities account for at least 80% of my equity asset allocation.
  • I believe that developing economies will enjoy much higher growth than the UK in the decades ahead.
  • I stick with my game plan. I intentionally do not review the value of my investments every day or even every week.
  • I try to keep my cool when others are losing theirs.
  • I remind myself often – I am an investor not a speculator.

Duncan R Glassey
Senior Partner – Wealthflow LLP

This article is distributed for educational purposes and should not be considered investment advice or an offer of any product for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. Past performance is not indicative of future results and no representation is made that the stated results will be replicated. Errors and omissions excepted.