Five Essential Rules for Investment Success

Investing is not rocket science; but succeeding at it requires a healthy level of knowledge and understanding. Through its aptly named ‘Grow Your Know’ initiative, Liberty is on a mission to help young South African’s access the financial knowledge, insight and understanding they need to be able to put themselves on the road to investment success.

According to Mark Lapedus, Head of Product Development for Liberty Investments, while every individual will have different investment objectives and take a unique approach, there are a number of tried and tested ‘rules’ that have helped millions of people to achieve their investment goals – and, if applied diligently, can certainly help aspiring young investors to do the same.


Rule 1: Always have a plan.

“It’s become something of a cliché,” says Lapedus, “but when it comes to investing, if you fail to plan, you really are planning to fail.” He explains that this is because committing yourself to a realistic, carefully considered investment plan means you have to give the necessary thought to where you are, where you want to be, and how you can realistically get there. Importantly, he strongly recommends partnering with a reputable financial adviser for this process, and then putting your plan down on paper.


Rule 2: Diversify. Diversify. Diversify.

Given the volatility of investment markets, this is one rule you ignore at your peril. “Putting all your investment eggs into one proverbial basket is a recipe for potential disaster. It’s very seldom that every type of investment will perform badly at the same time, and by exposing your money to various opportunities, you know that if one underperforms, the others might pick up the slack.


Rule 3: Understand the principles of fear and greed, then manage or avoid both.

There is no place for emotion in investment of any sort, explains Lapedus, “so when you allow your fear of losing money or your desire to make quick money to dictate your thinking, you can be pretty sure that poor decisions are going to be the result.”

Lapedus urges investors to remember that they are ultimately responsible for their investment success or failure. “You make the decisions and you take the risks,” he explains, “which is why its vital that you stick to your investment plan and strategy, control your emotions, and never blindly follow other people’s sentiments or tips.”


Rule 4: There’s no time like the present.

One of the key components of investment success is time in the markets. “The sooner you start investing, the bigger your rewards will be,” says Lapedus, “which is why, even if you only have a small amount to invest right now, you need to make sure you make the effort to invest it – because delaying it could actually cost you a small fortune in returns over the long term.”


Rule 5: Always invest in yourself first.

This is the one rule that too many investors of all ages neglect. “You are your most important source of income throughout your life so it just makes good financial sense to invest in your ability to do that – whether this means constantly growing your knowledge, making the time to maintain your health, or both.”

While there are obviously far more than just five ‘rules’ that apply to the attainment of investment success, Lapedus points to these as an excellent starting point for anyone wanting to unlock the untold potential benefits of a lifetime of effective investment.

“The application of these principles allows for the establishment of a very solid foundation on which young investors will be able to confidently build their investment success throughout their lifetime.”

Liberty Group is an Authorised Financial Services Provider in terms of the FAIS Act (Licence no. 2409). The information contained in this communication, including attachments, is not to be construed as advice in terms of the Financial Advisory and Intermediary Services Act of 2002 (“FAIS”) as the writer is neither an appointed representative of Liberty, nor a licensed financial services provider as contemplated in FAIS. Please consult your financial adviser should you require advice of a financial nature and/or intermediary services

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