What’s the ideal investment strategy? Is now a good time to be in shares? How do you get a decent return on cash investments? Should currency risk be hedged?
Questions of this kind, often seen in the financial media, tend to confuse means with ends. The answer in every case is “it depends”.
Every night on the TV finance news, you’ll hear about the ups and downs of household name stocks, like the big four banks, Telstra, CSL, Wesfarmers, Woolworths, BHP Billiton and Rio Tinto. But the market is more than that handful of names.
Often these behaviours are the result of conditioned responses. We can have both good and bad investment habits. The key takeaway is understanding how they are created.
In his excellent book, The Power of Habit, Charles Duhigg explains why we continue to do self-destructive things. According to Duhigg, there are three components to forming a habit: cue, routine and reward.
“Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.” Steve Jobs
With an election year coming up, the media is rife with speculation around proposed changes to tax law and superannuation. The Federal Government is planning to announce their policy in the May Budget. Certainly superannuation is in the sights of both parties, and as you would know Capital Gains Tax on property is part of the opposition’s policy.
