ADVICE FOR LONG-TERM INVESTORS
money and investments. As a result, it is important to consult a trusted financial adviser who can help you to avoid making emotion-driven investment decisions and instead commit to a long-term financial plan, Wilson says.
Your adviser will be able to help you evaluate different asset managers based on their track records and investment philosophies before making your decision.
“Your success as an investor will depend on you finding the right balance of risk and returns, without allowing emotion to cloud your judgment. Your financial adviser will also help you to compile a portfolio with reasonable fees,” Wilson says. 3. Diversify. You should diversify among asset managers and different investment approaches. “That way, if markets do crash, your eggs are not all in one basket,” Wilson says. It is also important to be invested in different types of assets to minimise your investment risk.
“If you are concerned about making the right investment decisions at the right time, you could consider choosing a multi-asset portfolio, where the asset manager has full discretion over the balance of assets. They would then do the timing on your behalf,” she says.
“For example, good asset managers will start reducing equities on a market high and invest instead in the other asset classes, so that when the market corrects you will not be exposed to the downturn. This takes the responsibility of timing the market away from you, making it easy to invest at any time.” 4. Leave your money to grow. You need to take a long-term view with your money, so unit trust investments should be made for periods of five to 10 years, or longer.
“Short-term information influences stock prices only in the short term; over the long term, this volatility fizzles out. It is therefore vital that you give your money a chance to grow,” Wilson says.
She suggests that you check your investment statements once a year, but only begin to consider changing your investment after three years, when you can better evaluate your manager's overall performance.
“However, keep in mind that your manager may be doing exactly as promised. He or she may, for instance, be underperforming markets when they are running in order to protect your capital when markets are falling,” she says.