At Nest Egg Investments we believe in investing, not speculating. Investment advice is guided by a number of simple yet powerful principles and philosophies.
Asset classes are the biggest drivers of overall returns
The proportion of each asset class (equities, property, fixed interest, cash) you hold will have the biggest influence on your portfolio’s long term returns, and its volatility. Getting this right for each investor is a critical part of what we do at Nest Egg Investments. If the proportion of assets in your portfolio changes over time, we will look to rebalance back to your ideal weightings (a structured way of selling high and buying low).
Risk and return are related
There is no getting around this. Higher expected returns over the long term come with higher risks and more ups and downs. If you want to aim for greater investment returns, you will need to accept more volatility including periods of underperformance (possibly dramatic underperformance), and be prepared to stay the course (see Investment Discipline).
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 (less dramatic ups and downs, less risk of loss of capital) than a less well diversified portfolio. At Nest Egg Investments, we aim to diversify across asset classes, across markets, and across fund managers.
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 we will often recommend that significant proportions of our clients’ portfolios are invested in low cost passive or structured passive funds. At Nest Egg Investments, low overheads also mean we can charge industry low adviser fees.
Investment discipline is critical
Human emotions can often lead to catastrophic investment decisions! Time and again, investors see a market rise dramatically, get excited about the amazing returns possible, and eventually buy in often when the market is somewhere near its peak. When the market falls, investors get spooked about how much money they are losing (on paper) and eventually sell, often when the market is near the bottom (and miss the subsequent recovery). One of the most important things that Nest Egg Investments will do is act as your financial coach, help you stay disciplined, ride out the inevitable market declines, and avoid making poor emotion-fuelled investment decisions.
Time not timing
At Nest Egg Investments we are not overly focused on studying charts, trying to time the market, or prophesying the future. Instead we 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. We believe that time in the market, not timing is more important for long term successful investing.