Principle 1: Seek advice.
Every single investor has a different need. There is no substitute to having a financial plan that is personalised to you. A good financial planner understands you, your goals and your attitude towards risk versus reward. They will navigate you through your investment journey, guide your in volatile times and help your remain objective in your decision making
Principle 2: Make a financial plan.
We tend to all make new year resolutions and fail to keep them. A good financial plan can be the difference between hoping for the best and achieving your dreams.
The plan helps you stay focus on your long-term plans and keep out short term market noises and ensure you can objectively measure the successes of any action against the plan. A financial planner can review the progress and recommend ways to keep you on course.
Principle 3: Invest as soon as you can.
The earlier you invest the better. The principle of compounding is the ability to grow an investment by reinvesting your earnings. Albert Einstein called this the 8th wonder of the world. This allows you to generate wealth over time simply by reinvesting the capital and returns generated over time. This can make such a huge difference to meeting your long-term objectives.
Principle 4: Don’t invest in cash only.
Volatility is a part of investing and in volatile times. It is easy to make the decision to run to the safety offered by cash investment.
Warren Buffet once said “If you cannot control your emotions, you cannot control your money”. All investor will need an element of cash to cover short term requirements and emergency. For longer term objectives, capital appreciation on investment beats cash return and pain of inflation
Principle 5: Diversification
Diversification of your investment help takes the guesswork out of investing.
A well-diversified portfolio can provide the opportunity for a more stable outcome than a single investment. Concentrating in one share or investment type leaves you exposed to unnecessary risks.
Principle 6: Long term investing.
The key to a happy investing is to invest on a long-term basis. No one knows with certainty when the market will rise or fall.
The advantage when it comes to long term investing comes from TIME. Using it wisely is what guarantees the potential success of your plan. You are most likely to enjoy healthier returns, hit your financial goals, worry less about the short term blips.
Principle 7: Remain invested.
It is difficult to time the market to generate a return consistently. When markets are volatile, it is often tempting to move to cash there by crystallising a loss.
Plan, stick to the agreed plan and most importantly don’t try and time the market. It is difficult to predict the future movement of the market.
