So, this year, resolve to work smarter. As we saddle up for 2025, it's time to rethink our investment strategies. Just like a cowboy heading out at sunrise for a day's work, we need to approach our financial journey with a clear plan and steady resolve. The mantra for this year is simple: Doing less can lead to more. Here's how you can streamline your investment plan for maximum returns.
Keep to the Science: Diversification and the Fama-French Theory
A long-term investment plan should be grounded in diversification. The Fama-French Theory, which expands on the traditional capital asset pricing model (CAPM), emphasises the importance of diversifying across different dimensions of expected returns. By focusing on factors such as size, value, and profitability, you can maximise your potential returns over time.
Be Long-Term: Build Resilience
Building financial resilience is crucial. Just as a cowboy prepares for the unexpected on the trail, you should start by establishing an emergency fund and a planned spending and maintenance fund. Allocate 10% of your earnings to these items. Remember Einstein's eighth wonder of the world: compounding earnings. Use this powerful principle to your advantage by investing consistently over the long term.
Have the Right Mindset: Control What You Can
Focus on what you can control: your savings rate, the risks you can safely and comfortably take, and your investment horizon. These factors will have the most significant impact on your financial success.
Tune Out the Noise
In the world of investing, predictions, pundits, and attention-grabbing headlines can lead to emotionally driven decisions. These insights often focus on a small part of the global economy. Stay focused on your plan and switch off the noise. Keep a clear head and a clear mind, just like a cowboy who tunes out the distractions of the open range.
Find Your Balance: Trust in Sound Principles
Keep your investment strategy simple and balanced. Trust in sound principles and science. Work with a CEFEX™ globally qualified fiduciary financial adviser who will put your interests first. This allows you to focus on what truly matters: your family, passions, and purpose.
So, this year, resolve to work smarter. You might be surprised at how much you can achieve by doing less, just like a cowboy who knows that a steady, measured approach can lead to a successful day on the range.
Feel free to reach out , you never know we might make good trail partners.
Bruce Jenks is a financial adviser at Stewart Group, a Hawke’s Bay and Wellington-based CEFEX & BCorp certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, wealth management, risk insurance and KiwiSaver scheme solutions. Blog No 1.
The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz
