By Dawn Ridler
Whether you like it or not, investment success is in the behaviour, not luck. So let’s have a look at what savvy investors do:
1. They know their limitations
Investment is complicated, even experienced brokers will shy away from giving investment advice – or recommend safe, well-known funds. The more you know about investment though, the scarier it becomes, but that is way better than thinking you know everything. There is nothing like being unconsciously confident (thinking you know everything when in fact you don’t).
Unless you’re prepared to spend a considerable portion of your week keeping up with the global trends, tax implications, regulatory changes, economic indicators etc, get a trusted advisor to give you a hand. That advisor can do due diligence on the unit trusts or shares that you buy, investigate the fees on the platforms you use, investigate the investment philosophy of the asset managers you want to use, divert your funds into the right types of investment, make sure your investments are aligned with your objectives and timelines and alert you to macroeconomic changes.
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I know that paying your advisor a fee is a grudge, but regulations are changing to make it a win-win. In return for that fee you are entitled to feedback and ongoing monitoring of the appropriateness of that investment. Although a fee might erode the investment, believe me, a park-and-leave approach to investing can be even more dangerous. I continually come across investments that have been in parked for 20 years or more and are not even keeping up with inflation.
2. They know that you can’t buy respect
Keeping up with the Joneses is probably one of the most toxic behavioural traits when it comes to wealth accumulation. Wealth is what is left after you have consumed your income. It is as simple as that. There is no point in seeing yourself as a smart investor if you don’t leave yourself anything to invest with at the end of every month. If you worry what people will think about the car you drive or the house you live in, perhaps you need to spend some time with a shrink or a coach and not on property.com or going for test drives.