Smart(er) Investing

Investment Perspective – November 2019

Peter Flannery CFP AFA

 

 

“Neither the investing method nor the fundamentals of the business are right or wrong because the mood of the market is favourable or unfavourable toward the “stock”. That is because when you really think about it, “stocks” (shares) are all about the financials and the trading price, the share price… the cash up value. What matters more is the economics of the business” 

Peter Flannery

The greatest transformation that investors can make is to “flick the investing mindset switch” from thinking about where they invest to how they invest.

Once investors grasp this concept (I know it sounds simple), the opportunity for real investing success suddenly emerges. 

We only need to look at what goes on across New Zealand and around the world.  Few people (less than 10% of the population in any developed economy) ever achieve real financial success. 

This is interesting when you realise that lots of people invest in managed funds, the share market, property, term deposits, their own business and all manner of investments.  Yet still, less than 10% of the population in any country you care to name achieves real financial success. 

I know what you might be thinking.  So, where do those successful 10% invest?

They invest in a broad range of assets but generally in property, their own business and to a lesser extent, the so-called “share market”.

To be clear, I am sure you know people who invest in one or more of those areas and yet, they are still not financially successful (success: choose to work rather than have to work).  Do you see what I mean? 

Just to push this point further, when we look closely at the most popular investment in New Zealand behind term deposits (residential property) of all those who own rental property, again, very few are financially independent (can choose to work).

It is not where people invest but rather how  they invest. 

That is what differentiates those that are financially successful from those that are less so.  It is not the academically valid financial plan, nor where they invest.  It is how they invest… 

 

HOW

Stay tuned … next month I will explain how two billionaires invest.

 

“Jails are always closed yet full, while temples are also open, yet empty.”

                                                                                                                    Chinese Proverb

 

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