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There are a few aspects that directly impact the outcome of your investment results. These are things like market volatility, total investment cost, asset allocation, diversification, inflation and risk profiling, to only name a few.

For the long-term investor there is however one risk that stands out head and shoulders above the rest, that risk is HIMSELF.

To proof my statement, lets look at the following:

US research shows that investors underperform the funds they invest in over time.
Average fund return compared to average investor return (1994-2013)

The reason for this underperformance is called the behavioural penalty. Investors tend to lose out because they chop and change their investments in response to the latest news rather than remaining invested.

Benjamin Graham puts it well in his well-known quote: ‘Individuals who cannot master their emotions are ill-suited to profit from the investment process.’ 

What is the recipe for success?

  1. See an investment specialist, someone with a suitable and relevant financial qualification or at least a CFP. (certified financial planner).
  2. Clarify your investment time horizon, and stick to it
  3. Determine your risk profile. This should be a combination of your risk tolerance and your risk capacity.
  4. Together with your investment specialist decide on a suitable investment approach and implement this.
  5. And most importantly, be patient and do not make emotional short-term decisions that will surely affect your investment outcome.

Heinrich Coomans | CA(SA) | CFP ®   is a director at Affluence Group and specialises in Investments, Personal and Business Insurance. For any questions please contact him at or 084 586 9509