HOW TO: INVEST
It seems like we are all in search of the Ideal.
Whether it is a relationship, our bodies, friends, houses or jobs, it feels like if we just keep looking and tweaking things here and there, we will finally reach a place where we can sigh, sit back and think everything is in place how we want it.
Not surprisingly, life isn’t that simple. And nor are our investment portfolios.
The array of choice we have in Australia with respect to investments is mind-boggling. And as “consumers” of investment products we tend to become more confused when we have too many choices rather than benefitting from this huge selection.
We torment ourselves with the idea that there is a perfect set of investments or an asset allocation unique for each of us that will perform to expectations year after year. We sometimes look over the fence and think perhaps our neighbour is on to a good thing and question our approach.
We need to get back to basics and remember first principles to combat this anxiety.
Although determining appropriate asset allocation levels and investment selection is important we have to remember that there is no ONE right way to build wealth.
Some people are extremely uncomfortable and unfamiliar with shares and concentrate entirely on direct property acquisitions like investment units and houses. Although this might imply a lack of diversification, this can be (and has been for many) a very valid and successful manner of growing your asset base.
Others can’t bear the thought of the work involved in investment property and maintain solely share portfolios, happy to collect their dividends and distributions and rely on themselves and others for research and strategies.
The cornerstone of wealth creation is living within your means and having a manageable debt level as well as protecting your downside through appropriate insurances.
Agonising over what investments to make doesn’t really add value. Starting somewhere, anywhere, does.
It’s never a good moment to realise your fund has not performed above the benchmark or see your 1-bedroom investment property stagnate in value for long periods.
If you do look back, recognising or appreciating that at the time you made the decision to the best of your knowledge and ability helps alleviate the constant “whys” and “what ifs”.
Learning from the experience rather than berating yourself over less than positive outcomes is always a better approach.
There are no guarantees in this life with so many things. Investment performance is certainly one of them. Developing a strategy, putting it into place and giving it time to perform is all any of us can do, no matter whether the dollars are large or small.
Leave “ideal” out of the equation for now and focus on what’s important. Making a start!
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*Jill is a qualified chartered accountant, starting her career at Arthur Andersen in Perth, Western Australia and then in London at a satellite communications company. After relocating to Sydney from Perth in 2000 and raising her children to school age, Jill worked in asset management and business development at Access Capital Advisers for three years. Jill left Access Capital Advisers in 2009 to start wisewomen, a business aimed at educating women on personal finance and investing. Jill has a Diploma in Financial Services (Financial Planning) from Kaplan Professional.
