TERRY Power is regarded as one of the most astute men in the financial services industry.
TERRY Power is regarded as one of the most astute men in the financial services industry.
He is also an Executive Vice President of BT Financial Services Group.
At recently run BT investor forums, Terry shared what he terms his ten investment principles with the audience. There is a lot we can take from these principles and utilise for our own portfolios.
• Keep it simple. “Don’t fall for involved plans. They usually involve disappointment.”
• Set investment goals. “If you don’t know where you are going any road will take you there.”
• Do not abandon your goals, especially on the basis of short term results alone.
• Be disciplined in your investment approach. Terry quotes Warren Buffett, the world’s greatest investor, as saying: “Our capital markets are a relocation centre – they relocate wealth from the impatient to the patient.”
• Take a long-term approach to investing. Commencing your investment career with a long-term perspective will ensure that you won’t be swayed into bad decisions on the basis of short-term negatives.
• Diversify investments. This is probably the most hammered principle by investment advisers and financial planners. Every opportunity to minimise your risk by spreading your assets across the different sectors and investment arenas must be taken advantage of.
• Be wary of tax reduction schemes. Every year on or about 1 June warn investors of the impending arrival of the tax-advantaged investment. These investments can be nothing more than an attempt by investors to defer their tax liabilities. Rarely do they have any real investment value or credentials.
• Seek professional advice before making decisions. Again, this is an approach that has been advocated for a long time. In the volatile markets that exist, an event of any magnitude anywhere else in the world could have an impact on us here. Professionals who spend their lives looking after investments and portfolios are able to better assess the impact of such things on markets generally.
• Use compound interest. Compound interest has been called the eighth wonder of the world. There are numerous examples of what can be achieved by starting earlier with our investment programmes. For many of us this is no longer possible. However, our children need to be taught that this is an important skill and principle that needs to be learnt.
• Grow when you retire. There seems almost to be an imperceptible, unwritten law that states that when we retire our assets do not need to grow any more. The fact is that we, in Australia, are living a lot longer than our forebears. It is important, therefore, that we allow our assets to grow, even in retirement. None of us know exactly what our ‘use-by’ date is going to be. As such it is not possible to plan our expenditure with any degree of
precision. The only certainty that we do have is that our retirement years are a lot longer than has been the case in the past and that it is impossible for the government to continue to fund it.
These principles should be applied to all our investment
decisions to allow us to achieve the type and quality of retirement that we want.
He is also an Executive Vice President of BT Financial Services Group.
At recently run BT investor forums, Terry shared what he terms his ten investment principles with the audience. There is a lot we can take from these principles and utilise for our own portfolios.
• Keep it simple. “Don’t fall for involved plans. They usually involve disappointment.”
• Set investment goals. “If you don’t know where you are going any road will take you there.”
• Do not abandon your goals, especially on the basis of short term results alone.
• Be disciplined in your investment approach. Terry quotes Warren Buffett, the world’s greatest investor, as saying: “Our capital markets are a relocation centre – they relocate wealth from the impatient to the patient.”
• Take a long-term approach to investing. Commencing your investment career with a long-term perspective will ensure that you won’t be swayed into bad decisions on the basis of short-term negatives.
• Diversify investments. This is probably the most hammered principle by investment advisers and financial planners. Every opportunity to minimise your risk by spreading your assets across the different sectors and investment arenas must be taken advantage of.
• Be wary of tax reduction schemes. Every year on or about 1 June warn investors of the impending arrival of the tax-advantaged investment. These investments can be nothing more than an attempt by investors to defer their tax liabilities. Rarely do they have any real investment value or credentials.
• Seek professional advice before making decisions. Again, this is an approach that has been advocated for a long time. In the volatile markets that exist, an event of any magnitude anywhere else in the world could have an impact on us here. Professionals who spend their lives looking after investments and portfolios are able to better assess the impact of such things on markets generally.
• Use compound interest. Compound interest has been called the eighth wonder of the world. There are numerous examples of what can be achieved by starting earlier with our investment programmes. For many of us this is no longer possible. However, our children need to be taught that this is an important skill and principle that needs to be learnt.
• Grow when you retire. There seems almost to be an imperceptible, unwritten law that states that when we retire our assets do not need to grow any more. The fact is that we, in Australia, are living a lot longer than our forebears. It is important, therefore, that we allow our assets to grow, even in retirement. None of us know exactly what our ‘use-by’ date is going to be. As such it is not possible to plan our expenditure with any degree of
precision. The only certainty that we do have is that our retirement years are a lot longer than has been the case in the past and that it is impossible for the government to continue to fund it.
These principles should be applied to all our investment
decisions to allow us to achieve the type and quality of retirement that we want.
