Learning from history
The past 25 years have provided a few lessons when it comes to investing, which could have helped today’s investors avoid massive losses during the recent market volatility and high profile collapses, according to Vanguard Group chief executive and chairman Jack Brennan.
With a 25-year history at Vanguard himself, Brennan said knowing what you own, why you own it and being comfortable with what you own were the key lessons to be taken from any major bubble or scandal.
“A simple rule of thumb to consider when investing is: if you can’t see it, can’t understand it, or can’t explain the reason for owning it, it probably shouldn’t be part of your portfolio,” he explained.
“Many of the most successful and most sophisticated investors follow this advice.”
Brennan added that a wise approach involved a balanced investment strategy, high quality and discipline, explaining that there would always be a ‘sure bet’, but that the best precaution was a little bit of scepticism.
“Recent high profile collapses demonstrate that investing in the ‘next big thing’ is not a certainty,” he said.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.