Equity markets were rough in August and September 2015. It’s always difficult when portfolio balances fall, however you need to remember that negative returns are expected with growth assets. It comes with the territory and part of the risk and return trade off. During times like these I like to remind myself of timeless investment principles. It’s easy to list and hard to follow, I know. We’re human, with emotions and fears and memories, but it doesn’t make them less true. Here they are:
- There is always a cycle
- The power of compound interest
- Invest for the long term – consider goal based investing if you can’t
- Turn down the noise
- Focusing on investments providing decent and sustainable cash flows
- Buy low and sell high
- Avoid the crowd
- Seek advice
Source: Dr Shane Oliver, head of investment strategy and chief economist at AMP Capital.
By Ray Ong
Contact us on 08 9381 6811 for a complimentary consultation. Ray is a CERTIFIED FINANCIAL PLANNER® and LIFE RISK SPECIALIST® and has a Bachelor’s of Commerce in Financial Planning (with distinction). He is a member of The Financial Planning Association of Australia. We are based in Perth, Western Australia and specialise in retirement planning, wealth accumulation and wealth protection (life and disability insurance).