Many investors are uncertain about where to invest. The following investment principles will stand them in good stead:
1. Invest for income and let the capital take care of itself. Only through increasing its income can the value of a business increase. Over the long term, this principle holds true for investments.
2. The best value is offshore. With dividend yields of some of the largest companies in the world trading on attractive dividend yields, equity valuations in developed markets are presenting investors with a good opportunity to generate inflation-beating returns over the next five years.
3. Try to understand in which businesses your money is actually being invested. Speculating invariably involves buying and selling investments based on very little fundamental knowledge and produces enormous anxiety and poor results. Rather buy and hold companies that form an integral part of the day-to-day lives of consumers, and will continue to grow their dividends regardless of economic conditions.
4. Don't pay too much for an income stream. Avoid any investment where the dividend yield is well below the historic average. Paying too much for an income stream will likely result in poor returns.
Robin Hartslief is an investment professional at Marriott.
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