O&M can show you the secrets of building Wealth
Just starting out on your wealth creation journey? Have you been investing for a while and need help? Or do you need help working what is your best wealth creation strategy for you?
When it comes to wealth creation strategies there is no foolproof stock picking strategy or a fast track road to riches. Investment markets are complex and may appear difficult to understand for the average investor. However, there are basic investment fundamentals which can help ensure you are better positioned and with the help of a professional adviser they can develop a strategy that it fits your personality, the time you have available and your risk tolerance.
When it comes to investment fundamentals there are 5 key investment principles which you need to be aware and they are:
- Start early, invest regularly and reinvest returns.
- Set your investment goals
- Diversification – don’t put all your eggs in one basket.
- It’s time in the market, not timing the market.
- Invest for the long term – the trade-off between risk and return.
Regular investing is the key to financial success. A small amount invested regularly can be more effective than larger sums invested every now and then. The earlier you start investing, the more chance your investment has to grow through the magic of compound interest – which means you’re earning interest on your interest. The combination of these two elements gives you a great way to kick off your investment strategy.
Setting your investment goal clarifies your lifestyle vision and the time you have available will help determine your choice of investments.
Diversification simply is about managing risk which has a smoothing effect on your investment returns – you generally won’t get the huge gains, but you shouldn’t experience the big losses.
If you have a crystal ball then you can try to jump into the market at the right time ie when it is low. However, most of us don’t have that and time in the market us allows it to recover from short-term downturns and experience the highs of the market.
All markets have peaks and troff’s which can impact on your investment and generally when chasing higher returns there is an increased risk of negative returns. Investing for the long term will help you ride market volatility as time tends to smooth out the short term market fluctuations and places sudden declines and gains into perspective.
With regular professional advice can help ensure your investment strategy is working for you i.e. you have an asset allocation that is right for your risk tolerance, goals and time frame. Remember that our advisers also have access to important research, information and experience to help you create a unique plan that fits your goals.