5th January 2015
Much of investing is focused on short term noise and events which clutter investors’ minds and get in the way. Adrian Lowcock, head of investing at AXA Wealth suggest five rules the average investor would be far better off focusing on…
1. Only buy something that fits into your portfolio
Fund ideas and recommendations are not made specifically with you in mind. It could be topical, or driven by a marketing departments need to grow sales. Think about how a new fund purchase would fit into your portfolio. How will it affect your risk exposure, liquidity and diversification.
This is about making sure you have the right mix of assets in your portfolio. Make sure you have a mix of bonds, equities, commodities etc, that matches your risk appetite. Getting the right asset allocation is the most important factor to investment returns.
3. Review your investments
A surprising number of investors don’t do this. But reviewing your investments means you keep on top of the performance of them and only have the funds that suit your current objectives. Give your Portfolio an annual spring clean.
4. Buy low
It is human nature to avoid investing in stock markets when they have fallen or risk seems the greatest. Buy low, sell high is an obvious mantra but few investors actually do it. When markets are low investor confidence is also low so they do not invest until markets have recovered and confidence returns. Don’t follow the herd, buy when markets are low.
5. Keep making new investments
The best way to grow your savings is to use as much of your annual ISA & Pension allowances as you can. These are the best ways to grow your wealth. Regularly topping up your investments mean you can buy at different times and feed money into markets at attractive levels.