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Six expert strategies on how to invest

21 September 2016

Over the years many of the world’s best-known investors have offered nuggets of wisdom in a bid to try and help individuals become smarter investors. We look at some of their quotes and what we can learn from them.

The value of investments can fall as well as rise and you could get back less than you invest. If you’re not sure about investing, seek independent advice.

What you’ll learn:

  • How it may not pay to follow the herd.
  • Why investing should never be treated like gambling.
  • Why you should never invest in anything you don’t understand.

The playwright and poet Oscar Wilde once quipped: “When I was young I thought that money was the most important thing in life; now that I am old I know that it is.”

No doubt many who have perhaps neglected to save or invest adequately throughout their life will probably relate to such a sentiment. But what is the key to becoming a successful investor? The basic theory when it comes to stockmarkets is of course, to simply buy low, and sell high. However taking the decision to snap up shares, when markets are suffering significant periods of uncertainty, like the volatility shares endured when it was announced that the UK had voted to leave the European Union, is not an easy undertaking. But many experts will argue that such periods can potentially present some unique investment opportunities.

Always remember that the value of investments can fall as well as rise and you could get back less than you invest. If you’re not sure about investing, seek independent advice.

Here are some quotes that could help guide you on your investment journey.

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” Warren Buffett

The world’s most famous investor and boss of Berkshire Hathaway, Warren Buffett is renowned for delivering strong long-term returns. According to the so-called ‘Sage of Omaha’, much of this success has been down to not following the herd when it comes to making investment decisions as putting too much stock in popular opinion can be a dangerous strategy. As such if markets are rocketing, you may want to think about banking some profits but equally don’t automatically rush to cash in your investments if shares take a downturn. If you do, you could risk not only crystallising your losses, but you may also miss out on a valuable investment opportunity.

Find out more about understanding risk and return

“If you have trouble imagining a 20% loss in the stockmarket, you shouldn’t be in stocks.” John Bogle

John Bogle, the founder and former CEO of US investment firm The Vanguard Group, believes that investors need to be prepared for the ups and downs that come with the territory of investing. At times the stockmarket can be like a rollercoaster, but the hope is that if you can stomach the ups and downs, your investments may rise over the long-term, although there are no guarantees and you could get back less than you put in. If you cannot afford to lose money, and being invested is causing you sleepless nights, then it is probably not for you and you are may be more comfortable sticking with cash savings products.

Find out more about cash saving

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” Paul Samuelson

When it comes to long term investing, Paul Samuelson, the late US economist and Nobel Prize winner succinctly illustrates his own approach, which is never to treat investing like gambling, as taking short-term bets is highly unlikely to pay-off in the long, or even short-term. Generally it is recommended that individuals invest sensibly and regularly - and ultimately play the long game - it’s about ‘time in the market, not timing the market’. Investing should only be approached with a minimum time frame of five years but preferably much longer, as this way you give your money the time and space to grow.

Find out more about the significance of spending time in the market

“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” Robert G. Allen

Investing means taking on risk as the value of investments can fall as well as rise and you could get back less than you invest. But US politician and businessman Robert G. Allen believed this was a risk worth taking. While it is highly recommended for all investors to have a cash savings buffer, in a low interest rate environment, you are unlikely to earn a great deal from having your cash on deposit. Some people are ‘risk-averse’ meaning they’d rather put their money into safer investments, even if that means less chance of making big returns. Others are comfortable accepting a greater level of risk for the chance of higher potential rewards.

Find out more about your attitude to risk

“It's not how much money you make, but how much money you keep, how hard it works for you and how many generations you keep it for.” Robert Kiyosaki

Being able to pass down wealth to loved ones is a lifetime goal for many people. But as American businessman and investor Robert Toru Kiyosaki explains above, making money in the stockmarket is just half the battle - the real challenge is being able to keep and protect it, while allowing it to continue to grow. This means always maintaining a clear investment strategy and ensuring on a regular basis that your portfolio is suitably diversified. Remember that all investments carry risk and there’s always the possibility that you could lose money or get back less than you invest.

Find out more about how to build your portfolio

“Know what you own and know why you own it.” Peter Lynch

Here US investment guru Peter Lynch cuts right to one of the core principles of investing - never invest in something you don’t understand. While you may often hear market speculators talk up some hot new prospect, be very wary of such hearsay if you do not understand a business, what it does and indeed what its prospects are. Always understand what you are investing in, because to paraphrase Warren Buffet, risk fundamentally comes on the back of not knowing what you are doing.

Find out more about how to spot a long-term winner

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