Here are a few quotes from AMP Capital’s Chief Economist – Dr. Shane Oliver
1. The power of compound returns – saving regularly in growth assets can grow wealth substantially over long periods. Using the “rule of 72” it will take 29 years to double an asset’s value if it returns 2.5% pa (ie 72/2.5) but only 9 years if the asset returns 8% pa.
2. The cycle lives on – markets cycle up and down and we need to allow for it. Don’t feel that you need to jump ship when things look like they are heading south. Instead, continue to ride the wave and things will inevitably head north again – have faith!
3. Diversify – don’t put all your eggs in one basket.
4. Avoid the crowd – by the time you react with the crowd, chances are you have already missed the boat.
5. Turn down the noise – this was a big one in 2016 where the noise around political events really just created distractions.
6. Focus on investments providing sustainable and decent cash flows – not financial engineering.
7. Starting point valuations matter – for example, low bond yields will mean low medium term bond returns.