Evidence Based Investing 101: Focus On What You Can Control
“Don’t worry about what you can’t control. Our focus and energy needs to be on the things we can control. Attitude, effort, focus – these are the things we can control…”
Focus On What You Can Control
A financial adviser can offer expertise and guidance to help you focus on the actions that you can control and that add value. This can lead to a better and more fruitful investment experience.
We face a number of critical decisions on our life journeys from young, family and career-orientated adults, through our careers and then hopefully on to a happy, healthy, long and financially secure retirement. The challenge we face is that these decisions are made against the backdrop of uncertainty and fluidity – in our lives, the capital markets and the rapidly changing world we live in.
These decisions would be easier to make if we knew when we were going to leave this planet and if we could obtain a good return each and every year, of say, 4% above the inflation rate. But, life doesn’t work this way and so, we need to remember that it is important to focus on what you can control throughout your investment journey while avoiding wasting time and energy on those things that we cannot change or influence.
The factors we can control are made up of some of the key areas we’ve covered throughout our Evidence Based Investing Series including:
- What are the main drivers of investment returns?
- Accepting Market Pricing
- Don’t try to outguess the market
- Resist Chasing Past Performance
- Let Markets Work For You
- Practice Smart Diversification
- Consider the drivers of return
- Avoid market timing
- Manage your emotions
- Look beyond the headlines
Designing an Investment Plan That Meets Your Needs and Tolerance to Risk
By sitting down with a financial adviser, you will be able to create a plan that works for you and will help you to reach your goals. Everyone has a certain goal as well as risk appetite, priorities and circumstances. This is where an adviser will be able to craft a plan that fits around you and can be altered so that it can adapt when certain elements of your life change.
Creating a Portfolio that Fits Your Expect Returns and Let the Markets Work For You
Capitalism isn’t perfect but it works and is an effective way to deliver returns to investors who believe and invest in the system. Looking beyond asset classes to the deeper factors behind what drives returns can position you to benefit from higher expected returns by structuring your portfolio around them.
Many investors will stay closer to home and brands that they are familiar with when investing. However, by having securities across different market segments, you can better manage risk. This is why global diversification is needed to broaden your investment universe.
Expenses, Turnover and Taxes Have to Be Managed
Investors often make the mistake of looking at the headline investment returns that markets deliver and fail to consider the impact on long-term wealth of costs. This might include inflation, tax as well as the costs associated with investing such as turnover, adviser and fund manager fees. If you focus on reducing your costs within your investment plan, you can see significant benefits in the long-term via the result of compounding over time. Many successful investment outcomes are underpinned by the reduction of frictional costs throughout the investment process.
Remain Disciplined When Markets Dip and Rise
By being mindful of the fact that we are only human, and that our emotions and instincts will come into play at times of uncertainty or stress, we can reduce the negative effects of these influences. Working with a financial adviser who is able to be objective and who has the right information and research on hand when it comes to making important decisions, can make your investment journey significantly more comfortable.
Helping You Focus On What You Can Control
Our team of financial planners can help you focus on what you can control to help you achieve your long-term investment and financial goals. Contact us to learn how you can benefit from evidence based investing.
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