16 January 2019

Investing - Our Process Works!

When investment values are heading nicely upwards there is less scrutiny of performance. But when they have been heading downwards the tendency is to look a bit harder.

But whatever investment markets are doing, the best results from investing come when you have a good process and stick to it. The last thing you want is to start worrying that you should have done something different when values are going down.

We have a well-defined process which we use for our clients, and it works.

It is a simple fact that markets fall from time to time. That is nothing unusual and is to be expected in the course of a long term investment. So our process includes an assessment of an investor's long term goals, and of their willingness and capability of coping with the ups and downs - their "attitude to risk".

That leads us to a spread of different types of investment which aim to provide the best returns for a given level of risk. We then review that with the investor every year and adjust accordingly. Simple.

I say it works because we continue to see good levels of growth for long term investors, albeit moderated by recent falls. Higher risk investors have seen bigger falls recently than lower risk investors, but that bumpier ride results in better long term growth - which is all as it should be.

The most difficult scenario, though, is a new investor investing just prior to market falls. It's easy to focus on - "I would have been better off keeping it under the mattress". That's true but unhelpful. There, too, the best thing is to rely on the security of a good process, being confident that it will come good in the end.

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