At Vanguard, we think four simple principles can improve your chances of investment success.
Think about goals
Having a goal in mind can help when it comes to picking the right investments. This could be anything from saving for retirement, to buying a home.
Are you looking for short term security or long term gains? How much growth do you need to reach your goal? Answering questions like these can keep you focused on building a portfolio that’s right for you and your needs.
Investing in the right mix of shares and bonds could have a bigger impact on your returns than anything else you do.
It’s all about finding the right level of risk and reward. Shares typically give you a higher return over the long term, but are riskier. Whereas bonds are more stable but offer lower potential returns.
Keep costs low
Making money from investments isn’t about predicting the future, because the future is unpredictable. Instead you should focus on the one thing you can control – costs.
By keeping your costs low, you keep more of your returns. Those savings can really add up, especially in the long term.
Sometimes our emotions can lead us to make simple mistakes when investing. Like buying the latest hot investment when prices are high then panic-selling when prices drop – the opposite of what common sense says we should do.
The most successful investors are often those with discipline. Those who invest for the long term and don’t tinker with their portfolios too much.