<\/p>\n
There are a number of key principles that every investor should follow with the aim of building an effective long-term strategy designed to achieve their financial goals.<\/p>\n
Here\u2019s our rundown of the 10 principles that every investor needs to know:<\/strong><\/p>\n 1. Set investment goals<\/strong> 2. Plan on living a long time, and saving more for it<\/strong> 3. Cash is rarely king, and inflation eats away at your purchasing power<\/strong> 4. Start early and re-invest income \u2013 compounding works miracles<\/strong> 5. Returns and risks generally go hand in hand, so be realistic about your objectives and what you can achieve<\/strong> 6. Volatility is normal, so keep your head when all about you are losing theirs<\/strong> 7. Timing the market is difficult, staying invested matters<\/strong> 8. Diversification works: don\u2019t put all your eggs in one basket<\/strong> 9. Review your portfolio<\/strong> 10. If it seems too good to be true, it usually will be<\/strong> Source data:<\/strong> Investors need to follow a number of key principles It\u2019s not surprising that the world of investing can seem complex, especially in the current global economic climate. Investors face an endless supply of market news, many investment choices and often-changing market conditions.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/posts\/4072"}],"collection":[{"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/comments?post=4072"}],"version-history":[{"count":0,"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/posts\/4072\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/media?parent=4072"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/categories?post=4072"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/tags?post=4072"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nIt\u2019s important that you set yourself investment goals \u2013 this will help you stay focused and on track to achieving your financial objectives. With a well-structured plan in place, you can confidently stay committed to it.
\nThere are a number of factors to consider when setting your goals, such as your age, investment timeframe and risk tolerance.<\/p>\n
\nIn 2021, in the UK the median age at death was 82.3 years for males and 85.8 years for females[1].
\nInvestors should start early, invest with discipline and have a plan for their future.<\/p>\n
\nCash is a popular asset class, but it\u2019s important to remember that it is not always king \u2013 inflation can erode the purchasing power of your cash, making it a less attractive option in the long run.
\nWhen inflation is taken into account, cash typically lags behind other asset classes such as stocks and bonds, which can mean that over time, cash will generally be worth less in terms of purchasing power.<\/p>\n
\nCompounding is often called the eighth wonder of the world \u2013 by starting to invest early and reinvesting your income, you can take advantage of compounding to build your wealth over time.
\nThe power of compounding is so great that delaying investing by even just a few years, or choosing not to reinvest income, can make an enormous difference to your eventual returns.<\/p>\n
\nOf course, you always want to aim for the highest possible return while taking on the least amount of risk. But in reality, there is usually a trade-off involved \u2013 the higher the potential return, the higher the risk. And vice versa.
\nTherefore, if you want to target a higher level of return, you have to be willing, and able, to tolerate larger swings in the value of your investments along the way.<\/p>\n
\nVolatility is a normal part of the market, so don\u2019t let it rattle you \u2013 keep your head when all about you are losing theirs, and remember that the best time to invest is often when others are panicking.
\nSo don\u2019t panic when the markets are down. Instead, stay calm and focused on your long-term goals.<\/p>\n
\nIt\u2019s no secret that timing the stock market is difficult. In fact, it\u2019s often said that trying to time the market is a fool\u2019s errand. By staying invested you ensure that you\u2019re participating in the long- term growth of the market, which helps to mitigate the effects of volatility.
\nStaying invested in the market allows you to take advantage of opportunities as they arise. By staying invested, you\u2019ll be in a position to buy when prices are low and sell when prices are high.<\/p>\n
\nBy spreading your money across different investments, you can minimise your risk and maximise your chances of success.
\nOver time, different investments will tend to even out, so the aim is to grow your money even if some investments underperform due to market movements.<\/p>\n
\nReviewing your investment portfolio allows you to monitor your progress and ensure that your investments are performing as expected, giving you the opportunity to make changes to your portfolio if necessary.
\nIt helps you stay disciplined and focused on your long-term goals.<\/p>\n
\nPromises of high returns with little or no risk are almost always too good to be true \u2013 there are a lot of scams out there, and many people looking to take advantage of unsuspecting investors.
\nBefore investing, consult with a financial professional to help you understand the risks involved.<\/p>\n
\n[1]https:\/\/www.ons.gov.uk\/peoplepopulationandcommunity\/birthsdeathsandmarriages\/lifeexpectancies\/
\nbulletins\/nationallifetablesunitedkingdom\/previousReleases<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"