Navigating Common Investment Pitfalls
Everyone makes mistakes at some point in their lives. Some are relatively minor while others could be long-lasting consequences.
Making a mistake with your investments could set you back hundreds, if not thousands of Kwachas. Some errors are immediately obvious, whereas others might not become apparent until much later in life when the damage may be harder to reverse. Therefore, we thought of sharing some common traits that can help you minimize making errors that may impact your negatively and reduce your net worth.
Investments without a goal
It is often said, an investor without investment objectives is like a traveler without a destination. Investing is one of the smartest financial decisions a person can make to manage his wealth and achieve long-term financial security.
However, it is quite common for most investors to start off on their investment journey like a traveler who undertakes a long and arduous journey without knowing which direction, where the next filling station will be and when they will disembark. This often makes investments difficult and could affect your consistency towards what you are working at. Further, it presents unique challenges for us who may also not easily gauge if we are assisting you to meet your objectives or not.
Therefore, we always have encouraged our clients to start with a strong why. This will encapsulate your financial goals, what and when you want to spend your money on in the future.
Goal based investing provides clarity to outcomes and helps you to steady your course when financial storms strike. You will also be able to track and monitor your progress as well as easily challenge or redirect your plans.
“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” Benjamin Graham
Invest in time
Warren Buffet once stated, “The rich invest in time, the poor invest in money.” When it comes to investing, time is your most important partner. Without appreciating time, you will not appreciate your investments. Note that time is the best partner to reward you on your investment and help you meet your objectives.
In view of the above every investor must be fully aware of the power of compounding. Compounding simply means making money on your original investment, as well as on the gains made in the following years (i.e., growth on growth over time). If you leave your investment over a long period of time, the investment not only grows each year, but grows exponentially. This interest is called compound interest and is the key to long term growth and wealth.
Depending on your investment horizon you may want to always take note that regularly changing your investment goals may cost you money with time. Therefore, you would do well to exercise patience as you monitor your portfolio over the medium to long time.
Always remember, you cannot save time for future use. But you can invest it for the future you.
Seek Expert Advice
An investment in knowledge pays the best interest. (Benjamin Franklin) When it comes to investing, nothing will pay off more than educating yourself. Do the necessary research and analysis before making any investment decisions.
As your Client Portfolio Managers, we are at your disposal if you seek to cross reference anything about available options. Note that as part of the investment code of ethics we have a duty of loyalty to our clients and must act with reasonable care and exercise prudent judgment. We also endeavor to act for the benefit of our clients and place clients’ interests before our employer’s or our own interests. Therefore, this gives you the investor credible access to get advice from us on any portfolio realignments that you seek to make.
The market is currently filled with a lot of noise and commentaries on investments. It takes skill to decipher the right sounds and shut off the noise. As part of our portfolio management we have continued to aim at assisting drive the required information as well as investment advisory that will help you to make informed choices. Please feel free to always get in touch with any of our team members for any expert advise that you may seek.
In conclusion, we can only reiterate that we fully recognize that we have an important role to play in shaping your financial future. Therefore, be rest assured that at the core of what we do are a set of values focused on doing the right thing for our clients, our people and the community we serve.