Long-term success comes from investing for the long term, having a solid plan, and letting compounding work its magic.
Investing: Getting Back to Basics
With the shear volume of news these days, it’s tough to make sense of it all. Tariff negotiations, celebrity feuds, wars that break the rules, protests that call in the National Guard, the rise of AI, and ever-increasing deficits and spending – it’s a lot to take in. But amidst all this chaos, there are some basic principles that can help us navigate the investment environment.
Remember, everyone has their own risk profile and needs, but for the most part, the basics stay the same. Here are four principles that can help you build a solid financial foundation for long-term success:
Invest for the Long Term
Markets experience fluctuations, often exhibiting unpredictable short-term trends. However, historical evidence demonstrates that patient investors generally receive favorable outcomes. Maintaining long-term investment through market cycles and resisting the temptation to time the market enables your capital to capitalize on sustained growth patterns.
This chart presents the performance of the S&P 500 from the commencement of 1990. It is evident that the recent declines appear particularly pronounced, including the significant drop during the COVID-19 crisis in 2020 and the tariff dispute that emerged at the beginning of April. Notably, the dot-com bubble of 1998 is scarcely represented, and the global financial crisis appears to be a relatively minor event.
Have a Plan and Stick to It
A solid investment plan acts like a compass. It keeps you focused during turbulent times and helps prevent emotional decisions. Your plan should reflect your time horizon, risk tolerance, and goals and should be reviewed periodically, but not thrown out at the first sign of volatility.
Let Compounding Work Its Magic
Compounding is what happens when your investments earn returns, and then those returns earn more returns. It’s a slow starter, but over time, the effect is exponential. The earlier you start, the more powerful it becomes.
This is the All Share Index charted against the cash index (Stefi) and the CPI. It gives a great illustration of the power of compounding, as well as the illusion of safety that is mentioned below.
Beware the Illusion of Safety
Keeping money in cash or “risk-free” investments may feel safe, but over time, inflation quietly erodes its value. While cash has its place (for emergencies or short-term needs), it’s not a growth strategy.
Investing isn’t about predicting the next big winner – it’s about following time tested principles with discipline. Long term success rarely comes from luck; it comes from a clear plan, steady contributions and the power of time.
Asset Class Returns
The table below represents a rolling year view of the major asset class returns that we track. It offers a view of the asset classes we use to diversify your portfolio.
Investing: Getting Back to Basics
With the shear volume of news these days, it’s tough to make sense of it all. Tariff negotiations, celebrity feuds, wars that break the rules, protests that call in the National Guard, the rise of AI, and ever-increasing deficits and spending – it’s a lot to take in. But amidst all this chaos, there are some basic principles that can help us navigate the investment environment.
Remember, everyone has their own risk profile and needs, but for the most part, the basics stay the same. Here are four principles that can help you build a solid financial foundation for long-term success:
Invest for the Long Term
Markets experience fluctuations, often exhibiting unpredictable short-term trends. However, historical evidence demonstrates that patient investors generally receive favorable outcomes. Maintaining long-term investment through market cycles and resisting the temptation to time the market enables your capital to capitalize on sustained growth patterns.
This chart presents the performance of the S&P 500 from the commencement of 1990. It is evident that the recent declines appear particularly pronounced, including the significant drop during the COVID-19 crisis in 2020 and the tariff dispute that emerged at the beginning of April. Notably, the dot-com bubble of 1998 is scarcely represented, and the global financial crisis appears to be a relatively minor event.
Have a Plan and Stick to It
A solid investment plan acts like a compass. It keeps you focused during turbulent times and helps prevent emotional decisions. Your plan should reflect your time horizon, risk tolerance, and goals and should be reviewed periodically, but not thrown out at the first sign of volatility.
Let Compounding Work Its Magic
Compounding is what happens when your investments earn returns, and then those returns earn more returns. It’s a slow starter, but over time, the effect is exponential. The earlier you start, the more powerful it becomes.
This is the All Share Index charted against the cash index (Stefi) and the CPI. It gives a great illustration of the power of compounding, as well as the illusion of safety that is mentioned below.
Beware the Illusion of Safety
Keeping money in cash or “risk-free” investments may feel safe, but over time, inflation quietly erodes its value. While cash has its place (for emergencies or short-term needs), it’s not a growth strategy.
Investing isn’t about predicting the next big winner – it’s about following time tested principles with discipline. Long term success rarely comes from luck; it comes from a clear plan, steady contributions and the power of time.
Asset Class Returns
The table below represents a rolling year view of the major asset class returns that we track. It offers a view of the asset classes we use to diversify your portfolio.