Martin Lewis gives advice on investing inheritance
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One thing first-time investors often forget is to thoroughly plan out their investment strategy, which includes not just a fair amount of research but also introspection to ensure your mindset is aligned with your financial goals. Aziz Alnaim, lead portfolio manager at Mayar Fund, shared his top three concepts to keep in mind when choosing your investing strategy.
Be a tortoise
In the fable, the tortoise and the hare, the victor is the underestimated tortoise, but both methods of running the race can be successful when it comes to investing.
“A truth of investing and saving is that there are many different ways of implementing a successful strategy.
“However, there may be one way that is right for you, the way you think and your risk appetite.
“For some, this will mean they are comfortable with big changes in their portfolio values, including losses, confident that in the long-run things will work out.
“Others will feel uncomfortable with even moderate paper-losses and prefer a slow and steady strategy.
“Choose a strategy and then stick with it – don’t be tempted by the latest investing fad – which brings us to,” Mr Alnaim commented.
Ignore the FOMO
“No FOMO – No Fear of Missing Out. I have this printed out and stuck to my computer monitor to act as a constant reminder to stick to your strategy.
“This year alone we have seen cryptocurrency and individual stocks popular with social media platforms ramp up in price, only to fall again, leaving some investors nursing big losses.
“Many of those losses were incurred as people failed to resist the temptation of ‘missing out’, chasing assets that had already gone up in value.
“We think fear of missing out is one of the worst instincts for an investor – kill it.”
Don’t be a boiling frog
As the fable goes, a frog put in cool water that begins to boil will not realise it’s being boiled alive until it is too late.
Mr Alnaim explained how investors can often fall into this mindset when it comes to their own investments being boiled alive.
“We can often give things that we already own a higher value than is rational just because we already own them.
“We can see this in the attics and basements up and down the country. Objects that have long passed their usefulness are kept ‘just in case’.
“The same effect is present when we own financial assets and this is something that investors need to manage.
Mr Alnaim advised: “Continuously compare what you own to other opportunities out there.”
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