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Wealth
Over almost 15 years as an Investment Adviser, I have seen the investment landscape become increasingly noisy. New investors can access more information than ever before, but more information does not always create better decisions.
Shares, property, cryptocurrencies, managed funds, market forecasts and social media commentary compete constantly for attention. For a motivated investor, the challenge is often not a lack of enthusiasm. It is knowing where to begin and what to ignore.
The client situation
In this case, the client was a younger professional earning a good income and keen to begin investing. They started with savings of $50,000.
They had spent considerable time researching investment options but had not yet created a coordinated strategy. The client was worried about investing at the wrong time, choosing the wrong fund or missing the next major opportunity. They also expected several medium-term life changes, potentially including travel, a rental property maintenance and career development.
Identifying information, values and some circumstances have been changed to protect confidentiality.
What mattered most
The client wanted to:
The objective was not to identify the investment that would perform best next year. It was to establish a strategy that could continue through many different market conditions.
Our approach
We started with cash flow, debt and emergency savings. Before investing for the long term, the client needed sufficient cash to manage unexpected expenses. Without a reserve, even a well-designed investment portfolio may need to be sold at the wrong time.
The client’s savings were then divided according to timeframe. Money that might be required for travel, a rental property maintenance or other medium-term goals was kept separate from genuine long-term investments.
The client started with a long-term portfolio value of $50,000 which was diversified across different markets, companies and asset classes. It was positioned towards growth because the client had time to recover from normal periods of market weakness.
Regular contributions were automated. This reduced the temptation to wait for the perfect moment to invest.
Our investment philosophy in practice
Time is one of the greatest advantages available to a younger investor. A long timeframe allows investment returns to compound, but it also allows an investor to tolerate periods of market volatility.
Market falls are uncomfortable, but for a regular investor they can also provide the opportunity to purchase more investments at lower prices.
Our focus was on:
Guidelines were established around emergency savings, contribution levels, portfolio diversification and the circumstances in which long term investments could be accessed.
The outcome
The client moved from researching investment ideas to following a clear plan. They understood what the portfolio was intended to achieve and why short term market movements should not determine long term decisions.
The client also gained a practical framework for balancing future goals with long term wealth creation. With a modest starting sum of $50,000, over 10 years, the portfolio has grown to more than $500,000 through disciplined saving and a focus on growth-oriented investment opportunities.
What I have learned
The best time to begin investing is not determined by a market forecast. It is determined by whether the investor has appropriate foundations, a suitable timeframe and a strategy they can maintain.
In my experience, motivated investors do not usually need more investment ideas. They need a framework for deciding which ideas are relevant and which are distractions. Starting early, remaining diversified and investing consistently can be far more powerful than repeatedly trying to predict the next market move.
At Yovich & Co, we help investors begin with purpose and remain focused on the future they are building.
Jarrod Goodall
FSP198885
