Investing truths to take to the bank

A short time ago, I shared some things a new investor might want to know or be mindful of as they start their financial freedom journey.  On that note, I believe some investing advice never goes go out of style, there are some investing truths to behold.

Here are my investing truths you can take to the bank:

  • All investing is subject to risk – even the safest investments have some risk.
  • Past performance is not a predictor of any future result.
  • In a diversified portfolio gains from some investments will help offset losses from others.
  • No matter how good you think you are as an investor, you cannot control your portfolio’s returns.
  • In order of long-term returns, cash has appreciated less than bonds and bonds have appreciated less than stocks.
  • The stock market is very unpredictable in the short-term but rather predictable in the long-term.
  • Every investor should focus on limiting mistakes because there is no perfect portfolio.
  • Somebody will always outperform you – accept it.

Do you have any investing truths to share?

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, we're inching closer to our ultimate goal - owning a 7-figure investment portfolio for semi-retirement. We're almost there! Subscribe and join the journey. Learn how I'm getting there and how you can get there too!

35 Responses to "Investing truths to take to the bank"

  1. I’d add a couple as well.

    Present programs are subject to change by future governments.

    One’s future health may or may not be what one anticpates.

    Reply
    1. That’s true to a point I think, although not all dividend-paying companies can be guaranteed to be the same solid performers going forward. The future is always uncertain.

      Reply
  2. Here’s my contribution: Don’t entirely trust any financial “advisor” who doesn’t have a clearly stated fiduciary duty. They are more interested in their gains first, and your gains second

    Reply
    1. I think that’s a great contribution Helen. Do you see the industry tilting away from commission-based models at some point and more of a fee-for-service model?

      Reply
      1. Hi Mark: Not sure. I had in mind brokerage company “advisors”, where generally one pays a percentage of assets as the fee. They also make additional commissions (unbeknownst to the average client) by selling (they call it recommending) new issues, income trusts, promoting certain stocks, debentures, etc.

        Reply

  3. * You must thoroughly analyze a company, and the soudness of its underlying businesses, before you buy its stock;
    * You must deliberately protect yourself against serious losses;
    * you must aspire to adequate, not extraordinary, perfomance;”
    (c) Ben. Graham

    I could add:
    * Don’t buy high in a 1929 style without knowing the valuation of what you buy;
    * Don’t sell on short term fear and so called “catastrophic plummeting” when it’s a variation of 2/3%…;
    * Don’t lose capital; until you trigger you lose and gain really nothing;
    * Don’t follow big ties awesome practices that will makes you a “lot” of money based on past macro-markets performance. Like with O’Shaughnessy;

    Reply
    1. “You must deliberately protect yourself against serious losses” – great stuff by a legend for sure.

      Thanks for sharing farcodev. BTW, where have you been? Long time no comment?
      Mark

      Reply
      1. Hey, you are welcome Mark!
        I’m sorry, I following a certain number of financial blogs by RSS but I don’t comment often; I’m more a lurker/reader. I only invest since 2012 so I have more to learn than to say, except for some times 🙂

        Cheers!

        Reply
  4. Good points. I would also add – do not fall in love with an investment. If it is no longer working – reevaluate and let it go if it is not living up to your expectations. Cut your losses and move on.

    Reply

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