Well it’s the 17th of January, have you broken your new year’s resolutions yet? I know I have! I lasted all of two days off cigarettes. Its amazing how the human mind can convince the body to do something it knows is bad for itself. And this is no less true when it comes to investing.

 

The truth is that we have all the evidence we need to know the do’s and don’t’s of investing and yet investors (both individual and institutional) continue to make the same mistakes year after year after year. So here are some New Years Resolutions you can make for your Investment Portfolio:

 

  1. Don’t Let FOMO rule your emotions

FOMO (or Fear Of Missing Out) can lead people to making some very bad decisions with their investments. Just look at the recent Bitcoin craze. Bitcoin has been around a long time relatively speaking and now after years of exponential growth people are feeling guilty they didn’t get in at the start and want to make up for it by diving in head first.

 

This isn’t a comment on whether bitcoin will go up or down in the future, the truth is I have no clue, just like everyone else in the investment world. The point here is that if you have a robust financial plan in place with an investment strategy lined up to achieve your goals why would you put this at risk just because of FOMO?

 

  1. Do as little as possible

How many of you joined a gym this January? I’m sure it seems daunting when you realise just how much work you need to do to hit your target weight? Well this resolution should make you feel better. When it comes to investing, less truly is more. We often mistake activity with productivity within this industry. All the research shows that picking an appropriate asset allocation and leaving it grow for a very long period of time is the optimal investment strategy.

 

One of the greatest drags on investment return is trading costs and these aren’t quoted in the Annual Management charge your fund manager takes from the fund. Roughly speaking a fund that has 100% turnover per annum (i.e. it trades all of its holdings in a given year) will have additional costs of 1% per annum that aren’t disclosed to you.

 

Passively Track Global Equity Markets for a long period of time, for as cheap as you can and you’ll do just fine.

 

  1. Make sure you know what it is you are trying to achieve

January is always a good time for some reflection and goals setting, especially when you step on the scales at the start of the month and you ask yourself “How did I get here?” So, this January, do spend some time asking yourself, where am I now? and more importantly where do I want to be?

 

I recently spoke with a friend over Christmas who had returned home after a number of years abroad, he had substantial savings and asked me what should he invest in. I gave him a simple answer, “I have no idea.” How can I tell you what to invest in if I don’t know what you are trying to achieve? Are these savings for your first house, your retirement, or for your children’s education? Each one of these would have very different investment strategies.

 

This January spend some time thinking about what it is you want to do with your life, if you’re having trouble visualising what things might look like in the future, ask yourself this one simple question:

 

“If money wasn’t an issue ever again, what would you be doing differently with your life”

 

When you have this question answered, engage with a Certified Financial Planner to design a Lifestyle Financial Plan for you, only after this has been done should you put together an investment plan.

 

Cian Callaghan CFP RPA QFA
Head of Financial Planning

 

 

 

Disclaimer

Metis Ireland Financial Planning Ltd t/a Metis Ireland is regulated by the Central Bank of Ireland.

All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified independent financial adviser before entering any financial contract. Metis Ireland Financial Planning Ltd t/a Metis Ireland will not be held responsible for any actions taken as a result of reading these blog posts.

Disclaimer


Metis Ireland Financial Planning Ltd t/a Metis Ireland is regulated by the Central Bank of Ireland.


All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified financial adviser before entering any financial contract. Metis Ireland Financial Planning Ltd t/a Metis Ireland will not be held responsible for any actions taken as a result of reading these blog posts.