Invest for the future, not for the past
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Investing bears no resemblance to gambling and, unfortunately past ‘form’ seldom provides an indication of future performance. Many investors are tempted to look at the best performing sector over the past year and then switch their investments accordingly. Beware this can be a recipe for disaster.
In many cases, last year’s poor performer can turn out to be this year's best – for example, International shares in 2012 averaged minus 0.5% but in 2013 became the star performer at 33.1%.
Or vice versa – International shares achieved an average return of 25.2% in 2015 but proved to be the worst performing sector in 2016 averaging just 0.4%. Investors who changed their portfolios in 2016 to chase those high returns from the previous year would have been seriously hurt.
The simple answer to this lack of form is to establish a portfolio with a mixture of the various investment assets that suits your own objectives and risk profile. Staying with this formula over the long term will invariably provide the most satisfactory outcome, irrespective of the performance of individual assets.
Contact us if you would like to review your portfolio to ensure it’s continuing to meet your needs.
