Yahoo Finance I've interviewed 100 expert investors: Here are their 5 top tips
Australians beginning their investing journey should take heed of this piece of advice: there is no one right way to invest, but the best thing to do is to simply start.
That’s the message shared by more than 100 investment experts that Equity Mates host Bryce Leske has interviewed since 2017 with co-host Alec Renehan.
The two have turned around 320 episodes across their two investing podcasts, with another three podcasts and a book on the way.
Speaking to Yahoo Finance, Leske shared the best tips the two investors have gleaned along the way:
Just start
Around 9 million adult Australians invest and close to a quarter of all of those started investing in the last two years, according to the ASX’s annual investment report for 2020.
Leske said novice investors can stumble at the beginning if they believe they need to be perfect.
“A lot of people get caught up … on the fact that they need to have the perfect strategy, and they need to understand all the barriers to investing, and they need to decide if they’re a value investor, and understand how to value stocks… but there is no one right way,” Leske said.
“It’s all about finding a way that is suitable to who you are as a person, your characteristics and what you feel comfortable with in terms of managing your money.”
Patience, grasshopper
The expert investors also agreed on the importance of trusting in time, patience and consistency.
All the experts Leske has interviewed are “incredibly patient,” he said.
“They stick to their strategy once they find a strategy that works for them, and they just keep on churning away.”
He said if you look at the return of the S&P 500 over the last 100 years, it’s clear to see that simply putting money in time and time again will almost certainly be a winning strategy. That index has returned a historic annualised average of 10 per cent from 1926 to 2019, and has recovered from every major downturn.
Cut the noise
The best investors know what’s within their skillset, and what they need to approach with caution, Leske added.
They also know how to remove the emotion from investing, and that’s something novice investors need to learn.
“Something that we learnt from the experts is reducing the noise of the day from the media speculation and the hype and the euphoria – they’re all really good at knowing what is within their circle of competence and not getting carried away in bubbles or hype,” he said.
“But as a beginner investor, it’s one of the hardest things to do.”
He said this skill comes with time in the market and that even expert investors will still be refining their strategies even after decades in the market.
“It’s a lifelong journey, but it’s a critical skill to have.”
Don’t try to time the market
This is a lesson Leske himself has learnt. He began investing when he was in Year 7 after saving 50c a fortnight from the age of five. He invested $500 in capital management company, BKI and continued to put money in.
And while he knew the importance of sticking to a strategy, during the GFC and the 2020 downturn, he decided to play the corrections.
“I didn’t really come out on top,” he said. “My lesson with this was just to stick to my investing strategy, which is to put money in the market at a consistent pace throughout the year.”
Don’t be too tricky
Leske said that while investors can learn to avoid these dangers, there’s another risk that appears for experienced investors: overtrading.
“That’s coming in and out of positions to try and take advantage of small increases in share price, or selling because of a small drop,” he said.
“Overtrading can really hurt your returns in the longer term.”
He said this habit often shows up in investors who are trying to outperform the market but who could really just put the investments into an ETF (exchange-traded fund) or listed investment company and get market returns.
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