THERE’S a lot of investment guidance out there. Too much can be overwhelming. So, how can you cut through the noise and find what you need? To help you out, we’ve put together a cut out and keep 10-step guide to successful investing.
The list includes tips on how to manage your portfolio effectively – covering everything from diversification to saving tax efficiently – to help you build, manage and grow your investments with confidence and ease.
- Stay invested
This may seem like an obvious tip but actually time in the market is more important than timing the market. We recommend you drip feed money into the market through regular investing. Learn more about the benefits of regular investing.
- Be diversified
Assets respond differently to the same events. Maintaining a diversified portfolio across different asset classes, sectors and geographies may provide a smoother ride. Learn about diversification and asset allocation.
If you’re looking for investment ideas, check out the Fidelity Select 50 Balanced Fund – an actively managed fund that benefits both from a limited universe of what we think are some of the best funds in the market and from broad diversification.
- Look ahead
It’s hard to not react to the headlines, especially when they’re gloomy. But remember that the market moves before the economy.
Investors don’t wait for the dawn to break, so don’t become more bearish as the market falls – instead be fully invested, ahead of the upturn.
- Manage your tax
Pay your taxes and be grateful, as Warren Buffett famously advised, but don’t pay what you don’t have to. Take advantage of your tax-free allowances – whether you have a spouse or children – maximise what’s available. Learn more about your tax allowances.
- Just do it
There’s power in small amounts. Developing the habit of regular investing is more important than how much you can save.
- Get started
Time matters more than how much you save. Investing in your twenties is supercharged compared to your fifties. An investor who hesitates for even a handful of years is unlikely to ever catch up with their more prudent friends who get on with it. The early starter can even stop contributing in later years and still end up with a bigger pot. There’s more about getting started here.
- Take the right risks.
Risk is rewarded in the long run. For example, the evidence of the last 120 years or so is that shares outperform bonds and cash over long periods. Over 18 years or longer shares have never underperformed other assets so if time is on your side then give yourself the best chance by taking sensible risks. Learn more about risk and reward.
- Don’t overpay.
Valuations matter. Investing when assets are cheaper stacks the odds in your favour. Be contrarian. And patient.
- Know yourself.
Invest when it feels hardest. Don’t follow the crowd. Be fearful when others are greedy and greedy when others are fearful. The best investment returns are achieved when you swim against the tide, investing when most people are too anxious to do so.
- Make the market work for you.
Volatility is not the same as risk. Short term fluctuations are irrelevant as long as you intend to remain invested. What matters is when you crystallise a loss or a gain. Volatility creates opportunity. Learn more about volatility.
These tips are not time sensitive, so if you want to take a look at your portfolio and do an annual MOT, you can always refer back to this guide. Although, if you feel you could benefit from some financial advice on your investing journey, consider discussing your options with a qualified financial adviser.