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Nine Tips for Long Term Investors

We would like to tell you about nine investment planning tips for investors in Perth and across Australia. The tips are courtesy of Dr Shane Oliver, who is the Head of Investment Strategy and Economics and Chief Economist for our parent company, AMP Capital.

Investment Planning Tips to Long Term Investors

On the AMP Capital company blog, Dr Oliver recently provided a massive document containing his investment outlook for 2016. He covered numerous topics, the most important of which we have covered here on this blog. The article was called, “2016 – a list of lists regarding the macro investment outlook.” Here are nine tips Dr Oliver feels that investors “should remember.”*

    1. “The power of compound returns.” Those who save in “growth assets” often see substantial returns in the long term. For example, if an investment returns 8% per annum, the asset’s value doubles in nine years.*
    2. Long term investors are well-served to allow for cyclical losses in the short term and stay the course.*
    3. It is important to diversify one’s portfolio to protect against falls. It could be wise to consider active asset allocation.*
    4. “Turn down the noise.” Investors have instant access to market information and overreaction can cause bad investment decisions.*
    5. Buy low and sell high. Starting point valuations are important. Those who sell after a major fall are just locking their losses in.*
    6. The sharemarket can be volatile, but a well-diversified portfolio consistently generates higher long-term returns than interest from bank deposits.*
    7. Don’t follow the crowd in extreme actions because they are “invariably wrong.”*
    8. It is wise to seek investments that provide “decent” and sustainable cash flows.*
    9. Accept the current reality: investing is a “low return world.” In a world where inflation is only 2.5%, an investment that returns 8% is a good long-term investment.*

Call the Investment Planning Advisers at Approved Financial Planners

Remember that these are general tips as provided on the AMP Capital company blog. If you want individual financial advice, you need to call our office and talk to a financial planner. Call 08 6462 0888 today.

*AMP Capital, Dr Shane Oliver. “2016 – a list of lists regarding the macro investment outlook.” 21 January 2016.