It doesn’t matter when you become an investor, one thing you soon realise is from time to time something new will happen and you may feel a bit concerned.
However, whether the news is focused on a Trump tweet, tariffs, Brexit, nuclear threats or climate change, evidence suggests a successful investor will typically be one who remains optimistic.
It’s not that the optimists are always right. It’s just that pessimism leads to poor investment decision-making. Think about this:
1. There is no real way to know when is a good time to invest. That’s why pessimists often don’t get started. However, as a diversified investment portfolio will generally produce better returns than cash over time, the best time to be invested is usually now.
2. Optimists know that investments will sometimes not go as well as expected, but they are also willing to stick to the plan and remain confident that they will be better off in the long run. If you have invested in a diversified portfolio and have correctly assessed your capacity for risk, then staying invested is by far your best option.
3. Pessimists may get out well before a market fall, but often delay getting back in and miss the recovery – there are always a lot of market “bears” some of who will correctly call a downturn and get their money out. However, often the same investors will then fall back into the previous error and stay in cash for far too long.
So please remember to talk to your AdviceFirst Adviser if you are feeling uncomfortable but expect them to tell you that you are best to leave your money invested. After all, they have your best interests at heart.
Author: Liz Darney
Wealth Management Adviser
Liz is able to assist with financial health checks and ongoing portfolio monitoring. She has over 20 years experience as a retail investor, with a particular interest in sharemarkets. She also has a Diploma in Business Studies endorsed in Financial Planning.
Liz has worked for 3 years as a Wealth Adviser with AdviceFirst and she received the AdviceFirst “Outstanding Adviser of the Year” award in 2018.