BUSINESS NEWS - Investing is never just about numbers. Our decisions are shaped by experiences, emotions, and the world around us.
Here are a few thoughts to keep in mind when thinking about your portfolio:
1. Experiences shape how we view risk.
Your risk tolerance should be guided by your financial goals, life stage, and time horizon. But personal experiences often override logic. If you’ve been through a market crash like the Covid crash, a corporate collapse like Steinhoff or African Bank, or even fallen victim to an investment scam, you’ll view risk differently.
2. Intelligence doesn’t guarantee success.
Warren Buffett famously said, “Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ.” Overconfidence, especially when fueled by education or expertise, can lead to poor decisions. Success comes from emotional discipline, not just raw intelligence.
3. Long-term success requires short-term survival.
We all know the importance of long-term returns, but no-one lives in the long term. Staying the course through short-term volatility is where the real challenge lies. A simple, consistent strategy you can stick with will always outperform the “perfect” strategy you abandon when the going gets tough.
One big mistake like moving to cash in the midst of a market crash can have a serious impact on the compounding of your wealth. Sometimes it's worth paying a professional as a type of 'insurance' against making this type of mistake over a lifetime.
4. The real question everyone has: “Am I going to be okay?”
Whether your focus is on growing wealth, generating income, or protecting what you have, the underlying concern is the same: Will I achieve my goals without running out of money? A solid financial plan revolves around answering this question honestly.
5. Don’t get distracted in a noisy world.
The tools we have today make investing easier than ever. Automation lets you set up contributions, rebalancing, and reinvestments without thinking about it. But the endless stream of new products, trading apps, and alternative structures make us take our eye off the ball.
We need to keep it simple. Don’t overcomplicate it – that’s when you can make costly mistakes.
6. There’s no such thing as the perfect portfolio.
A portfolio isn’t about perfection; it’s about practicality. The best one isn’t the one with the most bells and whistles—it’s the one you can stick with when markets get turbulent.
7. Simplicity beats complexity.
Sophisticated strategies may look impressive, but they often come with higher costs, more room for error, and unnecessary stress. Simplicity, on the other hand, gives you flexibility and clarity.
When it comes to investing, less is truly more.
The principles of good investing aren’t flashy. They don’t rely on making the next big prediction or finding the “perfect” product. It’s about focusing on what matters—clear goals, a solid plan, getting your asset allocation correct and only paying as much tax as you legally have to, and then the patience to see it through.
Matthew Matthee has a wealth management business that specialises in retirement planning and investments. He writes about financial markets, investments, and investor psychology. He holds a Masters Degree in Economics from Stellenbosch University and a Post Graduate Diploma in Financial Planning from UFS. I have created an online blog to host all my newsletters. Check it out here - mattfinancial.co.za.
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