WE all want to be winners - we would all like to win that multi-million Lotto jackpot. But, at the same time, we also want to be right. This means that when you make an investment you want to buy at the right time and see a profit straight away.
WE all want to be winners - we would all like to win that multi-million Lotto jackpot. But, at the same time, we also want to be right. This means that when you make an investment you want to buy at the right time and see a profit straight away.
Imagine if we all just waited patiently for a bell to ring to tell us exactly when to invest. Price movements are all about supply and demand: a greater supply lowers the price and the greater the demand, the higher the price.
What you need to do is to try and identify under-valued assets and to make an investment with a clear understanding of its long-term nature. Then you need to be patient. So, if you are investing for the long-term, why am I explaining the importance of patience?
The simple answer is, because investment values may drop or, in fact, may do nothing for a while, and then, when everyone around you seems to be making money and you see their values increase, fear and greed slowly return.
Questions then arise such as, have I made the wrong investment? Should I have rather invested in another product that seems to be doing so well at the moment?
You need to realise that there are many external factors which can affect your investments and that most of these are generally beyond your control. Ask any successful investor the most important lesson they have learnt from their successes and they will agree that patience is number one.
Most of us do make investment mistakes. Anyone who has never made an investment mistake has also never taken any real risk. Placing your money in a bank would appear the safest. During the last 40 years, had you invested only in South African banks, you would not have lost any money, you would have received the interest due, paid your tax and, annually, you would have had more cash to show.
But I guarantee one thing - while on paper, you may have lost nothing, the purchasing power of your funds would halve every seven to nine years. Your R1000 of 25 years ago will buy you goods worth a paltry R125 today or put another way, R8000 would be needed to buy those same goods now.
In any investment plan, it is essential to keep reviewing your overall investment strategy to see whether your investments are doing as well as expected. This means that, even if you are unhappy with the way your stocks have performed, they may well have been doing exactly what was expected of them.
Another important lesson is not to look at anything in isolation. Remember that each piece of the jigsaw fits somewhere. Removing one piece may cause the entire puzzle to become skewed.
l The writer is a director of Bryan Hirsch Colley and Associates. Helpline 011-880-4888.
Patience is key when investing
WE all want to be winners - we would all like to win that multi-million Lotto jackpot. But, at the same time, we also want to be right. This means that when you make an investment you want to buy at the right time and see a profit straight away.
WE all want to be winners - we would all like to win that multi-million Lotto jackpot. But, at the same time, we also want to be right. This means that when you make an investment you want to buy at the right time and see a profit straight away.
Imagine if we all just waited patiently for a bell to ring to tell us exactly when to invest. Price movements are all about supply and demand: a greater supply lowers the price and the greater the demand, the higher the price.
What you need to do is to try and identify under-valued assets and to make an investment with a clear understanding of its long-term nature. Then you need to be patient. So, if you are investing for the long-term, why am I explaining the importance of patience?
The simple answer is, because investment values may drop or, in fact, may do nothing for a while, and then, when everyone around you seems to be making money and you see their values increase, fear and greed slowly return.
Questions then arise such as, have I made the wrong investment? Should I have rather invested in another product that seems to be doing so well at the moment?
You need to realise that there are many external factors which can affect your investments and that most of these are generally beyond your control. Ask any successful investor the most important lesson they have learnt from their successes and they will agree that patience is number one.
Most of us do make investment mistakes. Anyone who has never made an investment mistake has also never taken any real risk. Placing your money in a bank would appear the safest. During the last 40 years, had you invested only in South African banks, you would not have lost any money, you would have received the interest due, paid your tax and, annually, you would have had more cash to show.
But I guarantee one thing - while on paper, you may have lost nothing, the purchasing power of your funds would halve every seven to nine years. Your R1000 of 25 years ago will buy you goods worth a paltry R125 today or put another way, R8000 would be needed to buy those same goods now.
In any investment plan, it is essential to keep reviewing your overall investment strategy to see whether your investments are doing as well as expected. This means that, even if you are unhappy with the way your stocks have performed, they may well have been doing exactly what was expected of them.
Another important lesson is not to look at anything in isolation. Remember that each piece of the jigsaw fits somewhere. Removing one piece may cause the entire puzzle to become skewed.
l The writer is a director of Bryan Hirsch Colley and Associates. Helpline 011-880-4888.
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