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Getting it all to work together

I’m an Independent Financial Adviser, I get to chat with all sorts of people. I have a great job, I’m a lucky boy. I chatted with a military client in her twenties this week about stock market falls. As usual, the media has focused on the FTSE100, it forgets that not everyone invests in FTSE trackers.

This particular client has been a faithfully reliable, regular investor, putting aside £300 a month for the past five years into a selection of funds. She has a variety of tactics and objectives within her overall strategy; one in particular is a strand that she started to go towards a house deposit she’s expecting when she leaves the military. It has a different capacity for risk and loss to her other investment objectives, and her retirement strategy.

She reminded me that I told her the secret to success was to start early and set aside regularly. It doesn’t matter how much.. you just have to start. Even a tenner a week will build up. The important thing is to start the habit and continue with it. Like a Land Rover trying to get traction out of mud, it’s better to start off in low gear and painlessly build up momentum.

She’s in low risk funds for this particular objective because it’s important to her. Interestingly, over the years, as her role has become more and more serious, she has developed a higher level of risk and loss aversion anyway.

From outset, we didn’t concentrate on the insane high risk funds she intuitively liked the idea of. Instead, we identified the objective and gave it an importance relative to her others; namely a sailing boat fund, wedding fund (she tells me she still hasn’t found Mister Right), horse and field fund, and (eventually) her post military career business fund. Then she invested appropriately. She is one sharp cookie.

We identified an investment strategy that suited her, and then her objectives and then her tactics. The funds then, became an almost incidental consequence and consideration. Over the long term, she has understand what she’s doing, and more importantly. why she’s doing it.

Nailing the objectives clearly, before setting off, defining performance parameters and installing a sense of discipline built confidence and gave her a much clearer idea about what she’s doing. The clearer the goals, the better chance you’ll have of reaching them.

Write down what they might be, put them on the fridge door if you need to. Have a plan to get there, measure it, refine it but let it be your life Op Order. Let nothing in the news scare you and be frugal (within reason!) – you might have money in the bank but you also want mates. As someone at RAF Cranwell tweeted to me, it’s no fun being the richest person in the graveyard.

And the investor? Contently continuing doing what she now does best and indifferent to any modest hiccups. I’ve taught her well, she even questioned (with the slightest hint of concern) why one fund in particular was doing so well and was it a sign of trouble ahead. It’s nice she only has to worry about the gains.

As for Mister Right, he only has to worry about not pressing her uniform to her standards.

Little, often, sooner.