SHREDDED

I wonder if you have seen the video of the moment that a Banksy piece was shredded as soon as it was sold. There has been speculation about whether this was simply a stunt or a genuine attempt to expose the folly of the art world. It does not matter, nothing will change. The world we live in is obsessed by fame and will spend vast sums to share in its light. It is always something of a mystery that so many will be taken in by so few.

The financial services world is no different. Obsessing over performance that happened and marketing investment gurus or fund manager as stars. Fund Managers are actually given stars by ratings agencies. Those same agencies that told us all that day was night when it came to “creditworthiness” before the credit crunch.

Drawn to Success

Time has moved on, memories fade. Promises of lessons to be learned have come and gone. We are still lured by the glisten of success. Little has changed to investor behaviour. It is about as bad as it has always been. We may have some new terms or names for it, may even be able to spot it a mile off, but few are willing or able to adopt behaviours that are actually successful.

To be a successful investor you have to take a long-term view. You ought to hold a high proportion of your portfolio in a globally diversified portfolio of equities, bought as inexpensively as possible and held, ideally within a wrapper that enables you to choose how and when you draw money to suit both your circumstances and taxation. That is pretty much it…

You can attempt to beat the market, through selecting specific stocks/shares but remember that this has at least two key decisions – when to buy and when to sell. Few people achieve this with any repeatable success. They will tell you that they do, but the truth is rather different. Conveniently forgetting their losses which make up their averaged net returns.

There will always be someone willing to forecast precisely what will happen in the future. In a planet of over 7 billion people, there are plenty of them. Many will promote their views as alternative or counter-narrative, pandering to your sense of doom, or throw so much money and impressive glossy statistics at marketing a theory that you come to believe that they really are onto something different. Occasionally they will be right for a time.

Unvarnished Truths 

Here are some truths. If you plan to withdraw money within the short-term, bank it, do not invest it. If you wish to build the value of your money so that you have a shot at financial independence, invest. Invest cheaply, invest long-term, invest heavily in equities, invest globally. Invest with an understanding of taxes. If you want to give yourself a good dose of anxiety, look at your portfolio on a regular basis. If you want to enjoy life, don’t – but have a plan and make sure that someone is monitoring yours.

Normal and Ordinary Perfection 

Remember that market corrections are normal, crashes are normal, booms are normal. We do not know when and mostly do not know why. You cannot control the markets, it is impossible to time investments perfectly in a repeatable way. The same cannot be said for Banksy, who timed his (or her) shredding of “Girl With Balloon” to perfection, shredding it… whether the value has depreciated or in fact appreciated is a debatable point and only time will tell…

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk