The long-term outlook for a more challenging investment market with low-interest, subdued equity returns and higher volatility has led to some investors wondering whether a radically new investment strategy is warranted.
However, Vanguard’s latest economic and investment outlook for 2018 and beyond suggests that disciplined, diversified and patient investors who concentrate on factors within their control are likely to be rewarded over the long term.
The report emphasises its view that the answer to the prevailing challenges for investors is not adopting a “shiny new” approach to investing or “aggressive tactical shifts” to a portfolio.
Under-your-control factors include, of course, adhering to the fundamentals of sound investment practice such as creating an appropriately-diversified portfolio, setting goals and having realistic expectations for returns.
And the report confirms that such under-your-control factors as working longer before retiring, spending less and minimising investment costs can have a big impact on the likelihood of investment success.
An investor’s concentration on factors within their control far outweighed making short-term tilts to a portfolio in an effort to boost returns.
Interestingly, the action of saving more can have one of the biggest impacts on the likelihood of investment success. Like many aspects of good investment practices, simple strategies are often among the best.
Investors should concentrate on what they can control – not on what they can’t control.
You have no control, for instance, on the emotions of other investors but you can keep your own emotions in check when making investment decisions.