Focus on the important things in life and don’t chase returnsJust about every investor at some point in time, compares their investment returns to the market.
The point of investing is to build a better life and create financial resources that you can use to do the things you like to do.
You may be planning to retire in a few years, in which case your investments will need to be a valuable income source.
Retirement and travel go together, so your financial resources will need to support your travel plans. Looking after your family will likely be important, so providing for your grandkids education may be part of your plans.
No matter what your goals are, the investment return itself should not be the goal. The real goals are the things you’d like to do with your life.
1. It won’t make you happy
A better return may help you reach your goals sooner, and that certainly might make you happy, but a better return all on its own will not. You’ll probably lose sight of the important things in life if you get caught up chasing returns.
2. You probably won’t succeed
Its human nature to chase returns, however, an investment that was number one in its category in the last 12 months, may end up being one of the worst performers in the next 12 months. Same goes with direct shares, property or any other investment, last year’s winner may be next year’s biggest loser.
The fact is that the odds are against you. Chasing returns will most likely result in really poor outcomes, which will make it harder for you to reach your goals.
3. It takes the focus off the real goal
Chances are, once you start focusing on returns, you’ll obsess on returns above all else.
It’s not that you’ll forget about what you really want, it’s just that you’ll subtly and slowly lose touch with those ideals. Investing will start to become all about the performance, rather than the life it allows you to live — and that’s a slippery slope.
4. You’ll probably be using the wrong comparison
Why would you compare your investment returns against, the ASX200, global shares or cash rates?
Your investment outcomes should be determined by your lifestyle goals and objectives. Not the other way around. It may be that you can park your funds in cash and still provide for everything you need. Alternatively you may need exposure to higher yielding assets or assets that provide capital growth.
5. Returns go up and down
Let’s not forget that investments go up and down, this is called ‘volatility’. Short term volatility or reduction in values will happen, but focusing on your lifestyle goals will help reduce any anxiety caused by market movements.
Focus on YOUR Goals
In the end, the only thing that matters is your ability to reach your personal goals and do what you want with your life. THAT is the point of investing — and you don’t need to chase returns to do it.
So, focus on the things that matter, stick with them, and spend the rest of your time actually enjoying yourself.Disclaimer