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By Sonia du Plessis*
Navigating life’s ups and downs can teach you some surprisingly effective lessons that apply equally to your investments.
Here are four of those lessons that I constantly remind my clients to remember when looking at their long-term future.
Patience is a virtue
Long-term investing means that you’ve got to take the good with the bad. As in life, it’s important to recognise that highs and lows are simply the way it is.
Markets work in cycles and will correct over time. Knee-jerk reactions during market corrections or trying to time your entry into the market are therefore futile. If your decision is to stay invested, then you simply have to ride out the dips until prices recover – as they inevitably will at some point.
However, it’s not always bad to cut your losses and move on. It’s best to remove yourself from toxic relationships, and the same applies to bad apples in your portfolio. Take Steinhoff, as a recent example.
In the long run, though, it usually pays to remain invested and profit from the growth of a share over years, if not decades.
Don’t overthink it
It’s human nature to want to analyse problems and propositions so that you avoid making costly mistakes.
This is also a natural instinct for investors, who sometimes over-analyse factors over which they have no control. The only thing you can control is when you invest, and the truth is that aiming for perfect timing every time is just not reasonable.
If anything, you might end up doing nothing if you overthink it. I’m not suggesting you make uninformed or impulsive investment decisions, but short-term market moves are no reason to delay taking action.
Lastly, there’s nothing to gain from beating yourself up over decisions you’ve made. Rather, act and learn from the experience.
Adaptability is the key to survival
Human adaptability has been on full display over the past two years as the global pandemic has upended countless habits and practices.
Practically every aspect of our lives has been touched by COVID-19, yet we have mostly managed to survive, if not thrive, despite the upheaval.
The same can be said for a great number of stocks in this period. Tech newcomers like Zoom emerged from nowhere to dominate daily life, while other shares like Tesla have ridden a seeming unstoppable wave to ever-new heights.
As a result, markets are always evolving in response to current needs and future dreams.
Follow a plan
Whether it’s the annual holiday or annual check-up at the doctor and dentist, I bet you know the when, why and how of these important events.
Once you have an established plan, do not change your strategy, by doing this it will often result in not the best outcome for your investments. This point goes hand in hand with the first point.
Take the time and make the effort to speak to a financial advisor able to understand your current position and your future dreams, and how to get there.