Investing for a changing world
We share our perspectives of sustainable investing in an overall portfolio.
Sports has long been a part of Australia’s national identity. By taking cues from elite athletes in their training programmes, investors could consider adopting a perseverant and consistent approach when they map out their long-term investing strategy1.
One of Australia’s most decorated swimming champions has reportedly2 said that she focuses on getting in a swim each day during her training. She also does a lot of pace work to prepare her body for the different types of swimming styles and strokes. And during competitions, she stays focused on what’s she’s doing in her lane.
Perseverance and consistency
Investors, based on their investment objectives and risk appetite, could take a similar approach to athletes in their day-to-day training, focusing on consistent and regular investing1. Athletes generally train regularly over the long term, and not just aggressively over a short period.
Athletes also have specific needs for strength and agility, and the training would vary according to their requirements. In order to be able to compete over longer distances some athletes would ‘dial it back’ and use a pace that they can sustain for a longer time3. Similarly, the same could be applied when investing for the long term. Investors could keep their financial goals in-check, invest regularly and stay invested1.
THE ROLE OF LONG-TERM INVESTING1
Investing a fixed amount of money regularly can help reduce the impact of short-term market volatility on the overall investment in the long run.
A key reason to start early and stay invested is that this can help benefit from the compounding effect over a long period of time.
Athletes could also face ups and downs in their athletic careers. Likewise for investing, where markets can always have a bad day, week, month or even year. Market volatility is normal, and investing can involve significant drawdowns from time to time. Investors should be aware of the volatility they can handle, but troubled times aren’t a sign to sell everything.
What are the factors to consider when investing?
Time, diversification and the volatility of returns4
Taking a cue from elite athletes as they train towards achieving their goals, investors could consider investing regularly and staying invested as they strive to achieve their financial objectives.