Investing…

the key to successful investing for most of us is to stay invested and keep investing.

Using time to ride through the volatility and using the average long-term returns of the market to get compounded returns is the best way to reach our goals.

But investors find it hard to believe that it is really so simple. We prefer to believe that there must be someone really smart out there who has a crystal ball, and can tell the future with great accuracy. Hopefully, the last 12 months have shown us that this is a fallacy.

Although the idea of staying invested and keep investing is simple, it is really difficult to execute. I know it sounds oxymoron, but let me explain. You need the three 'S' to be present:

1) Sufficiency mindset,
2) Strong financial foundation, and
3) Strong adviser.

Sufficiency mindset

When I asked investors why they are investing, most will give me a strange look and answer: 'To maximise the returns of my money, of course'. This is exactly the mindset that will cause you to time the market, to try and beat it so that you can get maximum returns.

Sufficiency is the opposite of greed. We should invest for the returns we need so that when the time comes for us to use the money, like retirement or funding our children's education, we have enough.

Understanding this helps us not to be greedy or take unnecessary risks, to stay invested and keep investing. This is because, all we need is the average long-term returns of the market, which more than a century of history has shown us that it is always there regardless of any crises. But it is difficult to achieve this mindset because of the sin of greed that is inherent in us.

Strong financial foundation

If we have enough rainy-day fund to tide us through an emergency, if we are not overly in debt, if we are good in our work and earn a reasonable good income, if we keep our expenses low and are able to save 10 per cent to 20 per cent each month, if we are not investing all our money away, if our insurance is well done up to protect us against all life risks, if we are physically healthy, if we have quite a long while before we need the money we invested, the ups and downs of the market means nothing to us.

We will be able to stay invested because our foundation is strong. The problem with most investors is that we don't spend time doing a thorough financial audit and jumped right in and out of the market because someone invoked our greed or fear about an upcoming trend or financial holocaust that his 'crystal ball' is telling him.

Strong adviser

As an investor, we need an adviser that is experienced and competent to instill that sufficiency mindset, helps us know what we really need and assess our financial foundation. He will then put together a suitable investment portfolio that will deliver the returns we need over the long term but yet not goes up and down beyond what we are psychologically and financially comfortable with. This is so that we can stay invested and not bail out halfway, because we feel like vomiting! He must have the moral courage to stay and hold on to us throughout the entire investment ride.