Anything of any value takes time. Likewise, creating wealth is a long-term process.
Well-structured investment strategies have always taken uncertainty into account. Patience, resilience and a robust strategy are imperative to weather the global investment storm that has been raging in recent times.
As you embark, or continue, upon your journey to great financial security, it is important to wholly understand the investment landscape. This is one of the areas where having an adviser you trust will help you successfully navigate the ups and downs of a stormy market and exploit the nuances of profit-yielding opportunities.
If you experience pangs of fear or doubt along your journey, then it means that you’re taking it seriously and you’re engaging in what’s going on around you. No-one is immune to these experiences.
What exactly has created the stormy conditions?
Recent market events are focussed almost entirely on the effects of the global lockdowns relating to COVID-19, but in the months leading up to 2020, we’ve been seeing volatility in the markets. Some of these relate to oil prices, trade wars between China and USA as well as credit ratings from the big three credit rating agencies — Fitch Ratings, Moody’s and Standard & Poor’s (S&P).
Add in the winds of political uncertainty and the high pressure systems of a fast changing global economy, many investors have at best been treading water or have seen their wealth decline in real terms, as portfolios have largely been unable to beat inflation over the short term.
Goodbye to the Past
It is important to put things into perspective and appreciate that investment markets often go through weaker growth periods of consolidation (this is technically known as a process of reversion to the mean).
Given the current global climate, 2020 and possibly 2021 are likely to be a time of consolidation in the markets. However, if you’re looking to achieve a long-term investment goal, it is important to not be swayed by short-term ideals or emotions, as you have a higher probability of growing your wealth if you stick to your investment strategy.
The Five Steps to Long-term Investment Success and Financial Independence
- Determine your investment objective by specifying a realistic goal you wish to achieve.
- Set your time horizon, which is the number of years you have to achieve your goal.
- Decide on an appropriate investment strategy by selecting a combination of asset classes in which to invest – bonds, property, cash, offshore assets, and equities.
- Select the most appropriate investment platforms, products and asset managers through which your chosen investments can be made.
- Monitor and review all of the above on an ongoing basis.
While a great deal of uncertainty remains for all investors, it is important to understand that uncertainty, and even volatility, in investment markets do not only represent risk, they also represent opportunities. Uncertainty is not new, either. It’s easy to blame current conditions, but if your strategy is prepared for uncertainty, if you are in the right headspace, you will be able to remain prudently invested in the markets.
It’s important to remain informed and seek to improve your knowledge about your investments, then keep the various elements of your investment plan aligned to navigate uncertain waters and continue on your journey to wealth creation.