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10 key principles of our investment philosophy

By Sam Instone - May 22, 2023

Although the term 'philosophy' may sound daunting and complex, it can be quite simple.

It can be so simple in fact, that it can be summed up in a single phrase...

Our investment philosophy is the culmination of decades of experience and expertise in understanding the intricacies of markets and human behaviour.

Balancing risk and reward, for example, is crucial in investing, but many individuals are unsure of their true risk tolerance or how much risk they can actually afford to take.

This is why we take the time to thoroughly understand you and your future when creating your 'Life Strategy'.

We also all have biases, even if we're not aware of them. Our human nature has evolved with quirks that may help us navigate everyday life, but can hinder our investment decisions.  Failure to stick with a plan through all the ups, downs and sideways movements is perhaps the most frequently seen wealth destruction mistake we see.

Investment philosophy is a really big subject - a quick Amazon search returns more than 4,000 results. 

So, below are the key points of our own investment philosophy. 

1. You can’t predict the markets

Nobody can. We’d rather spend your time and ours building an intelligent, flexible plan to keep you on track, whatever the future holds.

2. You can trust the markets

While we can’t predict what will happen, one thing we do know is that the global stock market is reliable and holds up in the long term.  If you can hold your nerve when others can't you'll always end up winning.

3. Beware the real risk: inflation

We all know about market crashes, but what about inflation? The real risk is not growing your money enough to reach your goals.

4. Trust in evidence-based investing

The evidence tells us that, mathematically, patience is rewarded. Screen out the noise and stick with your plan. 

5. Think ahead – far ahead

When we plan, we’re planning for your entire life, your future, and your legacy. The ripples you create now will become waves decades from now. Ignore the short term and focus on the long term.

6. Be smart about diversification

We’ll see to it that your eggs are liberally distributed across a wide range of global baskets.

7. Expect setbacks

Your investments will still have ups and downs. The important thing is to keep your emotions in check and always avoid knee-jerk reactions.  

8. Look beyond the headlines

Market drops and doldrums make great headlines, but they’re more interested in selling papers than providing accurate market updates. Learn to ignore them.

9. Control the controllable

You can’t control what the markets are doing, but you can control your reaction to them and choose to stick with your plan. 

10. Your Life Strategy is your benchmark

It doesn’t matter how anybody else’s investments are doing. It's all about your own progress towards the life you want.

If we were to summarise our philosophy, it would be 'stick with your plan'. This is actually much harder to do than most people imagine, as human nature is always and everywhere a failed investor. 

The ability to create a robust lifetime investment plan - and the faith, patience and discipline to keep from blowing up that exact plan at some fleeting moment of market/emotional stress, where fear or greed drown-out sense and reason, are typically not available to the unaided human mind.

We’re here to celebrate all the ‘good stuff’ that comes your way.

To help you reach your goals, stay on track – and stay focused when you’re tempted to deviate.

If you'd like to know anything else about why AES is the first choice for world-class financial life management, and why you'll enjoy working with us, why not give us a call?

Save and invest for a better life