I subscribe to investing, not speculating. Investment advice is guided by a number of simple yet powerful principles and philosophies.
Asset allocation is the biggest determinant of overall returns
The proportion of investments in each asset class (equities, property, fixed interest, cash) will have the biggest influence on your portfolio’s long term returns, and its volatility. Getting the asset allocation right for each investor is critical.
Returns and risk are correlated
There is no getting around this. Higher expected returns over the long term come with the likelihood of greater volatility – more (and more pronounced) ups and downs. If you aim for greater investment returns, you will need to accept more volatility, including periods of underperformance, and be prepared to stay the course.
Diversification reduces risk
While it is tempting to try to “pick a handful of winners”, there is plenty of academic research that shows that a well diversified portfolio will have similar expected returns, but a lower risk profile than a less well diversified portfolio. Diversification is important across asset classes, industry sectors, geographies and management styles.
Costs matter
The amount of fees and other costs you pay can have a significant impact on your portfolio’s long term performance. Management fees are closely scrutinised and investment recommendations will often include low cost index-tracking investments.
Investment discipline is critical
Human emotions can sometimes lead to catastrophic investment decisions. Advice provided can help you stay disciplined, ride out market declines when they occur, and avoid making poor emotion-fueled investment decisions.
Time not timing
As an investment adviser I am not overly focused on studying charts, trying to time the market, or speculating on the future. Instead I aim to help investors construct a well structured portfolio of quality investment assets to meet their particular needs, and to monitor and adjust the portfolio over time. Time invested, not timing, is more important for long term success.