Some important dos and don’ts of saving and investing
Written by Trevor Keidan on April 16, 2015.
Saving is about investing in the future for you and your family. Saving offers you financial independence by taking you from living day to day to giving you choices for yourself and those dependent on you. If you’re not already saving, make it a financial priority and the sooner the better. I guarantee that it will bring about great improvements in your life.
Don’t stop when things get tough, persevere!
Markets go up and down and so will the value of your savings and investments but historically markets recover and grow. It is important to ignore short-term highs and instead to take a considered approach over the long term, always bearing in mind that investment is a marathon, not a sprint.
Do focus on the end goal
Setting clear goals for your savings will help you keep focused. These will depend on your own unique personal situation and could include a secure retirement, a dream home, your own business, a great education for your children or even a luxury yacht. Concentrating on the end result will help you stick to your investment plan through the highs and lows.
Don’t focus on the now
In fact, what is happening to your investments now is pretty much irrelevant to the outcome. Keep in mind that professional investment managers buy when the market is low and take profits at its height. That said, it is absolutely key that your investments are being correctly managed and you should choose who does that with care. Go for a proven, reliable investment manager who will ensure that you have the right asset allocation balance for you and your tolerance to risk with a well diversified portfolio.
Do be emotional when thinking about the financial planning you haven’t yet done
Have you ever thought what would happen to your family if you fail to save or plan? If not, you should. Will you be able to afford that costly university education for your children? Will you and your partner be able to live out your golden years in comfort? And what would happen to your loved ones if you were to fall seriously ill, or die? If you fail to make a financial plan, your answers to these questions will be frightening ones. Get it right and you will have the peace of mind knowing that the financial future for you and your family is secure.
Don’t be emotional when thinking about your investments
Keep emotion out of the equation however when you it comes to your investments - emotional investment decisions are more often than not bad investment decisions. As mentioned earlier, the aim is to buy low and sell high but you should avoid trying to play the markets (they will probably win), ignore media hype and keep your attention on the end game. A professional investment manager can help with this – a good one will base their decisions on solid research rather than rumour and instinct.