DURBAN – According to the chief executive of one of the country’s top wealth management boutiques, investment success is attributed to behaviour and adopting these habits…not luck or mathematical genius.
Linda Stonier, chief executive and head advisor for Stone Wealth Management, bases these seven habits on years of experience in financial planning and investing for clients with optimal results.
1. Commit to your long-term investment strategy and don’t fall victim to your emotions.
Human emotions can be the biggest destroyer of wealth over time. You should only concern yourself with two value points, those being the inception and exit dates of your investment. The rest is noise. Learn to be patient.
2. Understand that the long-term investor’s true nemesis is inflation.
Don’t be tempted to invest in a cash only portfolio, as this is a reckless decision.
3. Expect financial emergencies and prepare accordingly.
Always set money aside so that you don’t have to access your investments. Continuously accessing your investments can be detrimental to them long-term.
4. Make sure you are well diversified.
Understand that you need to diversify your portfolio. The asset allocation is vital - it explains 94 percent of the variance in return.
5. Use specialist skills and expertise.
Select highly-skilled financial advisers who have the tools to bring you the optimum return on your investments to achieve your financial goals.
6. Don’t time the markets.
To do this, you stand a huge risk of diminishing your returns.
7. Practice these habits…constantly.
Healthy investment habits keep your investments on track and give you long-term peace of mind.
Although there is seemingly a lot of complexity in the financial sphere, these seven habits are pretty simple. The power of investing to build wealth and achieve long-term goals is not out of most people’s reach.
It comes down to having the discipline to follow the guidelines that work, and when in doubt – to contact a trusted financial advisor to help you reach the finish line.