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Wednesday 16 June 2021
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Muting the Noise

Living in the age of information overload, you have to learn to navigate successfully through the flow of information you receive via the media, press, facebook, messaging apps ,etc….

All this noise influences your emotions to perceive information as having a long term impact on financial markets,  it in fact does not.

There are three ways in which you can invest:

Doing it Yourself: As a personal investor, the temptation to succumb to market noise is the greatest. It takes disciplined people to be successful investors.

Via an Asset Manager (Mutual Fund or PMS): Investing via an asset manager transfers some of the short term decision making risk to a hopefully experienced team of professionals. Risk here is chasing short term performance through regularly switching between managers ( an act that has been shown to actually destroy value )

With the aid of a Financial Adviser: Investing through a Financial adviser allows you to interact with someone who can act as a gatekeeper, who can calm fears in times of market turmoil and who can help you keep an eye on your long term goal.

Some ways that you can mute the noise:

Set your goal, devise a strategy and stick to it. The goal can be long term for retirement purposes, medium term in saving for your children’s education or even saving for short term unexpected expenses. Either way, once a strategy is determined there will be very few market events that should alter that strategy. If goals change, so should the strategy, rarely otherwise.

Focus on what you can control. You can control the asset allocation of your strategy, the manager / company selected to manage funds, your financial adviser and even security selection if you manage your own portfolio.

Consider seeking the guidance of a Financial Adviser. You seek the help of a Doctor when you are sick, however, when it comes to investments, you need to engage with a professional before you get sick.

Realize that the majority of information is entertainment, not data. There is nothing wrong in keeping up to date with what is currently going on in the world. Most news is often short term and some events may stir up emotions. Such events should not change your strategy in order to reach your goals.

 

 




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