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You might be familiar with the “Serenity Prayer” – “God grant me the serenity to accept the things I cannot change; courage to change the things I can, and wisdom to know the difference”

One of the most important attributes of being a successful long-term investor is to not focus on the short-term uncontrollable factors, but to rather focus on things that you can control. Ironically the controllable factors play a much larger role in the outcome than the uncontrollable, yet we tend to spend much more time trying to figure out the uncontrollable.

So, what can, and should, the average investor control? Here are a few of them:

  1. Investment fees: Too many investors have no clear idea of what they are paying in fees. Before you invest you must fully understand what these charges are and how they’re Each additional 1 percent of fees and expenses reduces an investor’s end return. Over a twenty-year period, each additional 1 percent in fees reduces an investor’s end return by approximately 17 percent.
  2. Your risk profile: Your investment portfolio (asset allocation) should be constructed based on your risk profile. These are factors like your risk tolerance, your risk capacity and the investment horizon. To get this right is vital.
  3. Your expectation: One of the most important areas I focus on when meeting with clients is to make sure that their expectations are not unrealistic. As a starting point this will impact your emotional decision making and impact your ability to make good investment decisions.
  4. Your own behaviour: Based on research done in the US, the average unit trust investor in the US between 1980 and 2005 had underperformed the average fund in which they had invested from time to time by an annualized 2.7%. This shortfall was attributed to poorly timed buy and sell decisions by the investors. Had they stuck to their guns and not been switching, their investment returns would have been significantly better.

If you can get this right, you have achieved 95% of what determines a good investment result.

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