The Golden Rules of Investing

When it comes to investing, there is an inordinate amount of information and opinion that is freely available. Most people have an opinion about the direction of the economy, markets, which asset classes or sectors will do best, and which specific securities will out perform. And most of these opinions are supported by valid reasoning and sometimes by informational “evidence”.

But how helpful is this when investing?

To be a good investor over the long term you need to abide by some intelligent investment rules. Unfortunately, devising the rules is a much tougher act than coming up with forecasts and opinions. Following the rules is even tougher, especially when they may conflict with your forecasts and opinions.

The three golden rules:

1. Never invest until you have an articulated, long term strategy with a clear set of rules for investing;
2. Never disobey the rules;
3. Never ignore the rules. To do so makes them obsolete. Replace them with revised and improved rules, but never ignore them.

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Ownership of family wealth

Which structure is best?
For our clients, there are predominantly four ways they hold their personal wealth. They are:

1. Directly, either as an individual or jointly;
2. In a private investment company;
3. Through their family trust; and / or
4. Via a self managed or public superannuation fund.

Which structure is best? It depends. But given our emphasis on focusing on the things you can control, the structure choice is one that needs serious consideration. There are a number of often competing factors to take into account, with taxation, asset protection and succession / estate planning usually most prominent. This article considers some of the issues.
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