The most expensive thing investors do for free
Successful investing is not about avoiding volatility. It is about avoiding unnecessary decisions during volatility.
Imagine two investors.
Both invest R1 million in exactly the same fund. Both earn exactly the same return over the next 14 years.
The difference? One checks his investment every morning with his coffee. The other reviews her finances once a year with her financial adviser. Who sleeps better?
Research based on the FTSE/JSE All Share Index over the past 14 years reveals something fascinating. An investor checking daily would have seen their portfolio higher than the previous check only about 53% of the time. In other words, almost half of all check-ins felt like bad news.
An investor checking only once a year experienced positive results more than 71% of the time.
The investment was doing exactly the same thing. The experience was completely different.
Consider a simple example.
You buy a house for R2 million. The estate agent phones you every day with a new valuation.
Monday: R2,020,000.
Tuesday: R1,980,000.
Wednesday: R2,010,000.
Thursday: R1,995,000.
Friday: R2,025,000.
Would you enjoy owning that house?
Probably not.
Yet many investors do exactly this with their portfolios. They expose themselves to every market wobble, every headline, every rumour and every temporary decline. Eventually, the noise starts feeling like a risk.
The problem is not that markets fluctuate. The problem is that investors often react to those fluctuations.
The greatest danger to long-term wealth is seldom the market itself. It is the investor who abandons a good plan at exactly the wrong moment.
Successful investing is not about avoiding volatility. It is about avoiding unnecessary decisions during volatility.
The market rewards patience. The headlines reward attention. Unfortunately, those are usually not the same thing.
Sometimes the most profitable thing you can do with your investment portfolio is exactly the same thing you do with a bar of soap: leave it alone.
Name: Hansie Myburgh
Address: 14 Lelie Street, Northmead, Benoni, 1501
Contact Number: 071 471 2501 | 011 425 1318
Email Address: hansie.myburgh@sfpadvice.co.za
