For more than 13 years the team at Citywide Financial Partners have aimed to provide clients with robust investment management. Citywide Financial Partners focuses on a set of key principles for improving your chances of investing success. A recent report released by Dimensional outlines the factors we advocate when seeking to pursue a better investment experience.
Don’t outguess the market
It’s common for some investors to try and outguess the market in the hopes of improving their gains. There are also some investment fund managers who will try the same tactics in an effort to boost performance. In reality, no one has a crystal ball that can predict what the market will do with absolute accuracy, so it doesn’t pay to try playing the outguessing game.
Don’t follow past performance
Some investors insist on choosing funds based on their past returns and previous performance indicators. Yet the past performance of a fund or stock is not an accurate predictor of future returns.
Many investors are lured into false sentiments about a particular investment based on headlines. The sheer number of investing magazines, daily market news and commentaries circulating all focus on bold headlines to increase readership. Some headlines are designed to instil fear that a market crash is looming, while others are intended to lure investors into chasing the next investment fad. Look beyond the headlines and focus more on maintaining a long-term perspective.
Diversifying your portfolio holdings helps to mitigate some of the inherent risk associated with investing. However, trying to diversify within a home market often isn’t enough to protect an investment against adverse market conditions. Considering global investments could help broaden a portfolio’s exposure.
Investing is about the numbers and the potential returns, but many investors find it difficult to keep their emotions in check when markets move up or down. When market conditions change it can be tempting to react on an emotional level, which can lead to making poor investment decisions. In order to improve your investing experience, avoid reactive investing and focus more on your long-term strategy.
Dimensional’s report accurately supports the investment approach taken at Citywide Financial Partners that we strive to achieve with all our clients.
You can download Dimensional’s illustrated report here.