Summary: Tried and tested investment advice still holds true. When making your investment decisions, start early, take emotion out of the decision, avoid high costs that eat into returns and maintain a sensible portfolio of stocks and bonds.
When it comes to investment, the tried and tested techniques still work. A lot of the greatest investors got to where they are today because they followed the basics even when executing somewhat risky bets.
The sagest advice for investors is to start as early as possible. When you start investing early, you reap the benefits of compounding interest. According to Jack Bogle of Vanguard, even a modest investment can grow a staggering amount over time.
Ben Graham says that an investor’s chief problem and his worst enemy is himself. In any investment, you must have reasonable expectations and learn to avoid the noise that comes from Wall Street. Whenever possible, eliminate emotion from your investment decisions.
Basic arithmetic still stands when calculating the returns from an investment. For example, the net return is as simple as the total portfolio minus the costs and fees. The advice here is to pay attention to the costs that can eat into returns. Warren Buffet put it best with: “Investors who avoid high and unnecessary costs and simply sit for an extended period with a collection of large, conservatively-financed American businesses will almost certainly do well.”
It is important to be sensible with your investments. The allocation should include stocks, bonds, and cash. Stick to a diversified portfolio of high-grade securities and middle of the road stocks, balancing between risk and return.