Investment Wisdom from the Experts

Investing for success is not an easy process.  Although many claim to have the key, only a select few truly possess investment wisdom.  Here at Muirfield we have a few simple investment philosophies which have proven to be very effective over the past 27 years.  First and foremost is our KISS principle.  We have however found a few other quotes from more eminent people who may provide some useful guidance to investment.

“How many millionaires do you know who have become wealthy by investing in savings accounts?” Robert G Allen

This is more of a rhetorical question, and the answer I hope is clear.  Cash and bank deposits are low risk, low return investments that are fine for near term spending requirements and emergency funds but they won’t build wealth over long periods of time.   With current savings interest rates barely keeping up with inflation this notion has never been more true.

“Investing should be like watching paint dry or watching grass grow. If you want excitement…go to Las Vegas.” Paul Samuelson

Too often clients come to us with questions about exciting new schemes they’ve heard of promising staggering returns.  Unfortunately returns closely correlate with risk and taking on excessively high levels of risk in order to get rich quick often does not end well.  Investing is not the same as gambling, it requires patience and a much longer time frame to payoff.  A well diversified portfolio of cash, fixed interest, property and shares, both local and international is the key.

“More money has been lost trying to anticipate and protect from corrections than actually in them.” Peter Lynch – “Stop trying to predict” Warren Buffett

There is no doubt a flailing share market can be unnerving and preserving capital is important.  But trying to time a market and moving to conservative investments isn’t the answer.   Not only do you need to time when to exit the market but you also need to time your re-entry.  We don’t try the predict the future and neither should you.  The worst thing an investor can do is exit a falling market only to miss the recovery.  It’s as good as giving your money away.

“Our favourite holding period is forever.” Warren Buffett

Recessions and bear markets are a normal aspect of investing. But history tells us markets eventually recover and build to greater heights.  Naturally, the longer you hold something the more chance you give your investment of recovering and reaching new highs.  Those who are able to endure short term volatility are usually rewarded with steady long term growth.  All you have to do is look at any index chart and it will tell this story.

“Money can’t buy me love.” – The Beatles

Although money does help our standard of living and our ‘financial stress’ levels, it is not the be all or end all.  Studies have shown more money will only increase our happiness to an extent.  Those who are content with what they’ve got tend to live much more fulfilling and carefree lives.