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10 Tips to Getting the Best Out of Your Investment Experience

keys to investing successThere’s a wealth of information available on ‘how to invest’, but not a lot about how to ensure you have a successful investment experience.  Below are some of my top tips to cut through the ‘noise’ and help you understand the fundamental things which matter when it comes to investing.

10 Top Keys to Investing Success

1. Know Your ‘Why’

Money is an incredibly emotive issue, and understanding what influences your financial decisions is crucial.

The first and most vital step is to set out your vision for the future, both in terms of your lifestyle goals and the money needed to fund them.

Understanding how important it is that each of them is achieved is critical when investing.  This means spending some time determining your life values.

There are several questions you should be asking yourself, long before you dip your toe in investment waters:

  • ‘What’s important about money to me?’ – i.e. what does money represent to you? Freedom? Choice? Stress? Worry?
  • ‘If money was not an issue, how would I choose to live my life?’ ‘What would I do differently?’

2. Plan Your Portfolio with the End in Mind

A portfolio is NOT a plan. Everybody needs a financial plan (but not everybody needs a financial planner!)

What is the portfolio is trying to achieve? To answer this question, you need to have determined your goals.

  1. At what age would you like paid work to become optional?
  2. How much will you need to live on when you cease paid work?
  3. What goals/tangible things or events do you want to achieve to help you experience your values?
  4. Are there milestones in your life by which you measure your success that have a financial component?

You can access the planning tool we use with our clients, free of charge, here.

3. Determine Your Available Resources and How to Allocate Them

Every investment portfolio should comprise three basic elements:

  • ‘Sleep-at-night’ fund or emergency fund – readily accessible cash to cover emergencies
  • Short to medium term requirements – cash or cash based investments (e.g. National Savings certificates – when available) to meet known planned expenditure in the short to medium term (3 to 5 years).
  • Long term portfolio – to be invested to meet the cost of your long-term goals.  This element might include investment wrappers such as pensions, stocks and shares ISAs, and other investment based accounts. You might be investing lump sums, regular savings, or a combination of the two.

4. Determine the Level of Risk You Can Afford (And Need) To Take

keys-to-investing-success-2Your risk profile is determined by three factors:

  • The investment risk you need to take to achieve your goals, i.e. the annual rate of real return that you need to maintain your lifestyle and other goals (your financial plan will determine what this is);
  • Your emotional tolerance to risk, as measured by a psychometric risk testing tool.  (You can find out your own risk tolerance here).
  • Your financial capacity to adapt your lifestyle in the event of a permanent loss of capital and/or investment returns turning out to be lower than anticipated.

This might involve needing to work longer, spend less, earn more, downsize your home. Would any of these options work for you if needed?  What are you not prepared to compromise on?  (this relates back to your values and goals).

5. Decide on the Asset Allocation of Your Long-Term Portfolio

NOW you can start thinking about ACTUALLY investing your money!

As Warren Buffet once said: ‘Investing is simple, but not easy.’ The process can be very simple; the discipline of sticking to the process can be much harder!

Remember, as is often the case, less is more. The asset allocation of your portfolio can comprise just three asset classes:

  • Cash (a small amount to cover any fees, for example if you use an investment platform);
  • Fixed interest (i.e. government bonds) and
  • Equities (shares).

The right mix of assets for YOU should primarily be determined by your risk profile and the cost of your goals (see above).

6. Create Your Long-Term Portfolio

Once you have determined the asset allocation of your long-term portfolio, you can then go ahead and invest your cash (or reallocate what you already have invested!).

The most important thing to remember at this stage is that COSTS MATTER.  In investing, you get what you don’t pay for, as John Bogle, founder of Vanguard wisely said.

Do your homework and make sure you know the TOTAL COST of what you are planning to invest in.Click To Tweet

Do your homework and make sure you know the TOTAL COST of what you are planning to invest in.

7. Review Your Plan Regularly

Plans evolve. Life never moves in a straight line and nor will your portfolio.  The asset allocation of your portfolio will change over time so maintain a disciplined approach to rebalancing it back to your chosen asset allocation.

Once a year will be sufficient for most people.

8. Stay the course!

Warren Buffet said it best:

To invest successfully over a lifetime does not require a stratospheric IQ, unusual insights or inside information.  What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding the framework.’

The good news is that if you have invested in line with your emotional tolerance to risk you shouldn’t find it a problem to stay the course.

There will be bumps in the road. Markets can – and do – go down as well as up, but if you have invested in the market only to the level with which you can cope emotionally, you will not be tempted to bail out when the next market downturn occurs.

Remember, selling your equity investments when markets fall is a guaranteed destroyer of wealth.Click To Tweet

9. Leave Your Portfolio Alone!

Beyond your annual rebalancing review, avoid the temptation to look at your long-term portfolio too frequently. Just leave it alone.

10. If it Looks Too Good to Be True, it Probably is

When it comes to investing, there is no such thing as a free lunch. If you can invest with the above tips in mind, your chances of a successful investment experience will be far greater than if you simply accumulate investments with no overarching strategy.

Good luck!

Your Turn

Share with us! Have you made any investments recently? What tips would you give our readers?

And if you are READY to start investing, stocks and shares ISA is the simplest route to get started.

I highly recommend Fidelity Stocks and Shares ISA. Fidelity ISA is an easy-to-manage, tax-efficient Stocks and Shares ISA.

They offer the flexibility of investing lump sums or starting a regular savings plan to help you reach your goals. You can start a regular savings plan from as little as £25 or make a lump sum contribution from £1,000.

It’s a great way to invest your ISA allowance this tax year, and you can start investing in a wide range of investment options in just a few easy steps.

And the best part is, it is easy to get started – and no fancy investment knowledge is required!

Click here to start investing with Fidelity Stocks and Shares ISA!








Carolyn Gowen
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    1. Hi Lyndsey, thank you for taking the time to leave your comments. It can be difficult to find the money to invest but be reassured that you can start investing with as little as £25 a month as long as you are consistent. One of the keys to investing success is consistency in the long term.

      1. Theresa Cooke says:

        That’s good to know. At the moment I have limited funds but knowing I can pay minimal amount is a start

        1. Thank you so much for taking the time to leave your comments Theresa. You can start can start investing with as little as £1. The good news is once you become better informed, you can start growing your money.

  1. I think knowing your risk is so important, as a lot of people want to put things in low risk investment so they don’t lose out on any money. Great tips x

    1. I totally agree with you. It is important to establish the level of risk you can afford to take from the onset.

  2. Great post! I’m much more inclined towards a long-term investment strategy. You mention Buffet in this post and he constantly advocates investing in good ‘real’ companies that will stand the test of time and that have a good brand behind them.

    1. Thank you for taking the time to leave your comments. So true, when it comes to investing, it is best to be a long-term investor i.e. invests only when you can hold your investment over a long period of time.

  3. This is really useful information. My partner handles all our investments but I would really like to take ownership of some of my own in the future.

    1. Thank you for taking the time to leave your comments. It is important to take an active role in deciding how money is spent and invested.

      Financial planning and budgeting may seem time consuming, dull and, at times, complicated, but taking an active role will help you make informed decisions, grow your financial awareness and better use of your money.

  4. If I had money to invest it I would not wish to put it at risk at all. Right now the garage roof leaks and I need to change the car so investment is still in the dream phase!

  5. I have never invested, and cannot see me having the funds to. Great, informative post. Kaz x

  6. A thought provoking post this is. I never really thought of investing before until my two younger children were given £250 by the government to invest in future accounts. Both of their accounts are worth thousands now, and it’s been interesting to see it grow over the years!

  7. My husband and I are just now starting to look into investing. We have paid up a significant amount of debt, are almost done funding our six month emergency fund, and are ready to bump up retirement savings/investing. We have always had a 401(K) and put in what our employers match. But now that we are ready for more, I just don’t know who to look to for ideas on our best options and what accounts to trust. What are some of the best resources that have helped you in knowing what works and who to trust. Thanks for getting my wheels turning…

    1. Hi Krystal, I’m glad you found my post helpful. I think the best piece of advice I can give you if you are looking for a trusted adviser is to work with someone who is paid by you, not by the product provider. That way there’s no conflict of interest. It sounds as though you are in the US? There are lots of good fee based advisers over there – ideally look for someone who holds the CFP (Certified Financial Planner) qualification as they will do lifetime planning. There are loads of good books – Carl Richards ‘The One Page Financial Plan‘ is US based, while here in the UK, Tim Hale’s ‘Smarter Investing‘ is a good – and very accessible – read.
      Another good resource is http://www.monevator.com – a UK site but with links to lots of US sites which would be useful for you to learn more about investing.
      I hope that helps and good luck!

  8. These are some great tips!! I’ve never actually thought about any of this before, it’s not something I’m drawn to but for anyone interested in this stuff, it brilliant.

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