Pro tips on how to grow your investments in 2020

Pro tips on how to grow your investments in 2020

– Paul Damant, CFP (Director, Cornerstone Investment Advisory Services and Managing Director, Cornerstone Financial Services Group of Companies)

Are you ready to achieve your investment goals, grow your wealth and become financially fit in 2020? So are we! As with so many other things, getting the most out of your investments is all about remembering the basics, sticking to best practice and making informed decisions. Read on to find out how you can achieve your investment goals and growth your wealth this year and beyond.

Start from the ground up

For most employed people, being able to start investing depends on their ability to earn more than they spend. Without a clear understanding of you monthly position, you simply have no way of understanding your ability to free up disposable income, and more importantly, sustaining an investment strategy. Budgeting is critical.

Developing a clear investment strategy (investment plan and investment mandate), that will realistically assist in achieving your short, medium- and long-term goals is as important. Budgeting and strategically investing are both equally necessary in the journey to growing your wealth and becoming financially independent.

Finding a qualified and independent wealth advisory to partner with and to serve you in a fiduciary capacity is well recommended. In the world we live in, everyone is an “investment expert”. Assisting you to stay away from the “noise”, stick to your investment strategy and not make any irrational decisions, will help mitigate any unnecessary capital losses and achieve your investment goals.

Understand your investment plan and investment mandate and then stick to it

Developing an investment strategy or an investment policy document, will speak to your investment plan, risk tolerance, your investment time horizon (how long you plan to stay invested for), tax and estate planning consequences, etc. It’s vital to remember your investment mandate (your risk tolerance, investment time horizon), especially when markets are not performing well, and you feel like you should take your money and run. Don’t make any rash decisions before you have relooked and revised your investment policy document.

Stay invested – no matter what

Investors are often guilty of making the most common investment mistake at the perfectly wrong time – panicking and then disinvesting. The first and most common action taken by worried investors who see their portfolio values dropping, is to cash out their investments and to invest in “safer”, lower risk options. However, the cost implications (admin fees, penalties etc) and possible tax liabilities of cashing out, can lead to unnecessary losses in capital.

That is why it’s vital that you stick to your investment plan and stay invested even when the market is volatile. Historically, the market has always recovered and shown long term growth, therefore a disciplined and stable approach to investing will almost always serve you well.

Keep it independent

Many large assurance or investment companies constrain and therefore disadvantage their investors by only allow them access to a very restricted investment portfolio range. Unfortunately, as often is the case, these limited portfolios aren’t the best fit for an investor’s portfolio (pricing, asset allocation, etc). To ensure that you get unbiased advice that’s puts your needs first, make sure you consult a wealth specialist that is independent of any investment/assurance company. Look for an investment specialist who is able to develop an “Investment Mandate” that they can executable on a cost effective investment structure with an underlying portfolio that is “whole of market”, well-constructed with a clear investment strategy, competitively  priced  and flexible (free of penalty fees and other nasties).

Don’t lose your cool over short-term losses – especially if you are a long-term investor

Markets will fluctuate, and losses are inevitable from time to time. However, it’s important to remember to always refer to your investment mandate before making rash decisions. For example, the SA equity environment has experience flat to negative returns over the last 5 years, however, historically (10 years and longer) this asset class has comfortably outperformed inflation.

Remember to diversify

Don’t put all your eggs in one basket. Diversification is key to minimise losses and maximise returns. Make sure that your investment portfolio is well diversified and reviewed regularly – this will help to get the most out of your investment. Ensuring your wealth and investments keep on growing means getting expert and qualified wealth advice. For the best in the business, get in touch with Cornerstone Investment Advisory Services today on 011 794 6611 or email info@csias.co.za

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