Categories: Portfolio ManagementFamily Wealth Planning

Back To Basics

No matter how many times a “can’t miss” investment trend implodes, investors have demonstrated a regrettable penchant for chasing the latest short-cut to wealth creation.

At HighView, we believe to be successful, an investor must focus on the following:

1. Understand both short-term and long-term needs, goals and ability to withstand short-term fluctuations in the portfolio value (i.e. risk tolerance).

2. Document all of these needs, goals, and risk tolerance in a detailed Investment Policy Statement (IPS). This document should be referred to on a regular basis and provide you comfort when a market downturn has you questioning why you are invested the way you are.

3. Invest in a portfolio that is professionally managed, well diversified (but not over diversified) and designed to meet all of the unique needs detailed in the IPS. The portfolio structure should only change when the investor’s needs and/or goals change – not as a result of changes in the markets.

4. Search out and engage great quality managers with a proven ability to add value over time.

5. Have a deep understanding of the risks (or hire someone who does) and monitor those risks closely.

To those who say this type of investing is boring and unlikely to produce spectacular returns, we say “you’re right”. But, if done correctly it should produce the returns required over the longer term and it will moderate the losses when unexpected events take place (which they always do).

In the attached article written by our Chief Investment Officer, Greg Rodger, he reviews the basics of investing so that client investors can avoid destroying hard earned wealth. Although this article was originally written in January 2008, it remains completely relevant today, especially given the ongoing current volatility of global capital markets.

HighView Financial