“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” Warren Buffet
We’ve summarized below the most essential rules in the Investor’s survival kit for Family offices and private investors. Simplify your life & investments, be happy.
1) Know thyself
The ancient Greek maxim remains true in all contexts. Analyse your wishes, capacities, temperament, horizon and your means. Know your own blind spots. Your zone of comfort and wisdom should guide you, in good and bad times. Know your risk tolerance level.
2) Mitigate the risk
Create an asset-allocation plan to diversify on various investments, and do a thorough due diligence on each investment (with the help of an advisor if needed). Shield your assets. Repeat.
Adversity is a fact of life. Accept that, and you will be prepared
3) Invest, don’t speculate
An investment is a medium to long term endeavor, where you can focus on value. Be realistic, fruition takes time. Leave speculation to high-frequency trading algorithms and professional scalpers.
4) Don’t covet your neighbour’s yields
There is more to this than meets the eye. Do your maths. Exercise critical thinking. If an investment is performing extraordinarily better, it might be over-leveraged, dangerously exposed to interest rates or other.
Bad deals chase the money, while the money chases good ones
5) Build a strategy
Know your investment, entry and exit strategies. Stick to it. Learn hard, develop expertise.
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years” Warren Buffet
6) Stop the noise
Financial services companies such as Bloomberg or Thomson Reuters live on news-feeds, you don’t. There’s been a surge in new economic indicators. Fixating market feeds by the minute can only get you anxious. Stay tuned, but wisely and reasonably.
7) Check tax implications
Certain tax schemes allow you to save on taxes and loose on investments. Other investments seem sound and nice, but have dreadful tax implications. Check with your advisor at all times.
8) Put everything in writing
Irrespective of the special bonds you have with a family member, partner, contractor, or service provider, always put everything in writing. Especially with the family, in order to avoid unnecessary tensions.
Live happily. A happy family is gold.
9) Listen, deploy your wings
In times of ubiquitous information streams, do not be shy to accept inspiration from others’ ideas, experience or views. Sharing is the real wealth.
10) Build a smart team
Surround yourself with like-minded successful investors/entrepreneurs, use collective intelligence. Never take advice from somebody who never practiced what they teach.