There are no shortage of articles and books on how to invest, or information on different investments.

All that is well and good, and I have even written some of these articles myself, but many of you may have noticed that the bulk of my writing is about investing behaviour.

I strongly believe the biggest drag on our investment returns are not the stocks we pick, but the way we invest. Behaviours such as:

• Constantly switching funds trying to catch the next hot market

• Not having clear goals

• Having conflicting goals

• Spending unnecessary money that could have been invested

• Checking your balances too frequently
  

Your behaviours will impact your investment returns more than your investments will

The average investor performs significantly worse than the average returns. And this is not just due to fees. The difference is far greater than just fees. The remainder of the difference can be attributed to our own behaviours sabotaging our returns.

Your behaviour as an investor will have a far greater impact on the performance of your portfolio than the investments in your portfolio. And that is why I write so much about the ‘softer’ side of investing. Getting on top of your own behaviours will see you much better off than someone who knows a lot about investing, but can’t control their behaviour.

It is far more important to have your budget under control, know exactly what you want, and have good habits, than it is to decide between whether or not to have 15% or 25% of your portfolio in NZ equities for example.

Too many people focus on the latter, while having no regard for the former.

In this article, I wrote about the difference having good savings habits can have. In the example, I showed how someone with a 15% savings rate in funds returning 6% per year can achieve the same returns as someone saving 5% and returns of 10.5%.

Savings rate and behaviour is far more significant and important than chasing returns.

Of course it is great to have both good behaviours and solid investments, but I find that too many focus solely on the latter. Not realising the destruction their own investment behaviours are doing for their returns.

If you need an investment plan or recommendations , then get in touch today.

The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here