Investors are continually asking what is the main determinant of long term investment success?
Wall Street and the financial media would like you to believe that.
- Timing when to get in and out of the market
- Picking the right stocks and bonds to own.
- Using track record investing to find the next hot manager, will help you succeed in investing.
This is wrong! All the above factors actually negatively impact your portfolio in the long run. Any time you spend on the above activities is time wasted.
Allocating your assets based on your acceptable level of risk is the main determinant of investing success.
Your time should be spent on your most valuable asset, your career. Either improve the skills in your current career or learn new ones.
More importantly time spend with your family and friends is much more valuable than time spent trying to beat the market.
In most cases the reason we look to beat the market is our emotions. When the market has down turns, we become nervous and scared. When there are markets upturns we become greedy and jealous.
During prolonged up markets Warren Buffet said it best FOMO. Free of missing out.
We believe that when the market is going down it will always go down. Conversely, when the market is going up, we believe it will always go up.
The real problem is most investors are looking for stock market returns and Treasury bill risk. What they end up with is Treasury bill returns, (if they are lucky) and stock market risk.
Most investors miss out on market returns because they lack discipline. This is the main determinant of long term investment success.
This is where a true adviser can help. If your adviser allows you to panic during downturns or concentrate in the latest hot market. Any price you pay them is too much.
Fire your broker/agent and hire an investor coach/fiduciary adviser.
To be successful in reaching your long term goals you must own equities…globally diversify…..rebalance.