Investing Perpectives:
Seven Habits of Highly Effective Investors
Over thirty years ago, the book “The 7 Habits of Highly Effective People” quickly become a bestseller by offering a common-sense approach to improving life outcomes through personal change. Investing may be seen in a similar light – establishing certain habits can hep to make better investors.
If you’d like to schedule an appointment with me or my team, please contact us at 778 655 2410 or use the chat feature or contact form in the footer below.
Here are seven practices that can serve investors well:
1. Recognize that time is one of your greatest assets
The odds of investing success fall in your favor when you combine a long time horizon with the power of compounding investments. Even average returns, compounded over a long period of time, can lead to superior overall results. Consider that a one-time, lump-sum investment of $55,000 will yield around $209,000 in 25 years ar a compounded annual rate of return of 5.5 percent. However, in 55 years, it will yield over $1 million.
2. Accept that markets are inherently volatile
Volatility is what allows equities to be one of the greater generators of returns of any assets class over the longer term. While volatility has been muted for most of this year, recognize that it is a permanent fixture in equity markets. Over time, equity markets will have incredible up periods, such as the one we have experienced this year, but also difficult down times.
3. Maintain patience, through good times and bad
Participation, by having the patience to see through the inevitable ups and Dows, can make a significant difference in investing. Successful investing often involves the patience to overcome many shote-term setbacks in order to enjoy longer-term compounding and progress.
4. Don’t abandon risk controls
When equity markets are rising, it may be easy to get caught up in the excitement and forget that various guidelines have been established to control risk within a portfolio – for example, strategic diversification, rebalancing to a certain asset mix, limiting the size of any holding and maintaining quality criteria for holdings. These help to guard against being caught in the prevailing momentum by identifying potential risks that may not be overly apparent.
5. Stop listening to the noise
Everyone has an opinion on investing and the markets. In good times, everyone can sound like an expert and we may fear missing out. In difficult times, the media headlines can magnify economic misery and instill fear. At the end of the day, thoughtful analysis should drive decision making -not any peripheral noise.
6. Save more
Saving is one of the cornerstones of building wealth. You can build wealth without a high income, but you have no chance without a high savings rate. Saving is one aspect that an investor can control – unlike the many others which we cannot. such as stock market performance, interest rates or the timing of recessions.
7. Continue to have confidence in the value of support
We are here to provide support at every stage of the investment journey to help you achieve your goals, and this can extend beyond investment advice. This may include helping to instill discipline, through saving or investing, or to enhance total wealth management, through retirement-planning, tax-planning or estate-planning support. Studies continue to show that advised clients have greater assets – more that 3.9 times the assets that non-advised investors after 15 years – and greater discipline through volatile times.
If you’d like to schedule an appointment with me or my team, please contact us at 778 655 2410 or use the chat feature or contact form in the footer below.
I look forward to connecting with you again soon.
Sincerely,
Maili Wong, CFA, CFP, FEA
Senior Portfolio Manager
Executive Vice-President
If you have any questions about how this relates to you or your investment portfolio and financial plan, please give us a call at 778 655 2410 or email us at thewonggroup@wprivate.ca
