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Why you should be more like Mr. Spock (and 3 other tips on successful investing)

6 March 2015 1:53 PM
Emotion destroys wealth. A financial advisor explains and offers three other tips for being a successful small investor.

1. Vulcans would make great investors

Is greed good? Only if you want to get poor in a hurry. But fear will do that too. In fact, any excessive emotion when it comes to investing is your worst enemy, says Galileo Capital Financial Advisor Warren Ingram.

This might make sense to you now, but it’s much harder to keep in mind when your portfolio is skyrocketing or dropping like a lead balloon.

Mr. Spock, paragon of rationality and almost unencumbered by emotions such as greed and fear, would've rocked at investing.

2. Keep it straight and simple

Investors are, often to their own detriment, spoiled for choice. The amount of “products” available is mindboggling.

“You don’t have to make investments too complicated,” advises Ingram. “You can keep it simple and do incredibly well by just maintaining your focus.”

3. Fees are very important

You might be blissfully unaware of the fees your investments attract. Nevertheless, they erode your returns more than most people realise.

“I've never been to a braai where people discuss how they cut their investment costs by 0.2 percent,” says Ingram. “We get excited about our returns, or lack thereof, but fees are rarely discussed.

“Saving even half a percent on your investment costs over, say, 10 years has a massive impact on your investment performance,” says Ingram. “That 0.5 percent could be the difference between an OK retirement and an excellent one.”

4. Do the basics right and ignore the noise

The stock market is overvalued! The government is useless! The economy is weak! The rand is plummeting! It’s almost always best to keep your head down and ignore the racket.

“I’m not saying these things are irrelevant,” says Ingram. “But a lot of it is simply nonsense.”

Ingram suggests setting your own goals and maintaining your own investment strategy. “Ignore the hype and the noise and make logical, rational decisions."

Listen to the audio for more detail.


6 March 2015 1:53 PM

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