Five decades of owning shares and other investments have taught David Round some valuable lessons that both new and experienced investors should remember.
Ignore volatile markets, seek trusted advice and start investing as soon as you can.
“I wish I had started investing for my retirement earlier than I did,” said the semi-retired 73-year-old.
It’s a common regret of older Australians, and often ignored by younger generations who are busily focusing on careers and mortgages rather than looking to the future.
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Mr Round said another important lesson for investors was to avoid worrying about market volatility.
“Don’t get too concerned if the market goes down because in the long run it goes up,” he said.
“And find a good adviser you are comfortable with.”
Mr Round is a former professor of economics and his wife Kerrie is a former academic historian yet both believe in seeking quality financial advice.
While financial advisers have been battered by the banking royal commission, financial strategist Theo Marinis said constant changes to legislation and volatile financial markets made it difficult for people to invest on their own.
Golden rules of share investing
He said good advisers, accountants and lawyers were like personal trainers to keep people on track.
Mr Marinis said an important lesson for investors was “don’t chase”.
“People are chasing the next big thing,” he said. Some so-called experts claimed they knew which way markets were heading but “nobody knows that”.
“I tell my clients that I’m smart enough to know I’m not very smart.
“The secret to all this stuff is putting money away on a regular basis and letting compound interest do the heavy lifting for you. It goes up exponentially the longer it’s in there.
Investors should “not get freaked out by market volatility”, Mr Marinis said. “That’s what happens in the short term. Stick to your strategy.”
Metropole Property CEO Michael Yardney said economies and markets always moved in cycles.
“That’s mainly because most of us get swept up in the optimism or pessimism of others,” he said.
“No two cycles are ever the same, but investors need to know that each downturn paved the way for the next boom just as each boom sets the scene for the next slump.”
Mr Yardney said other investment lessons he wished he’d learned when he was younger included:
- Set goals and review them regularly to “keep your eye on the prize”.
- A positive attitude could change your reality.
- Investors should be proactive rather than reactive, and always on the lookout for opportunities.
- Mistakes mean growth. “Sometimes negative experiences, mistakes and failures can be even better than a success because they teach you something new which another win could never teach you.