Fail to plan, plan to fail

Investors without a plan often construct portfolios by evaluating the merits of each investment or fund individually. If the evaluation is positive, they add the investment to their portfolio, often without considering whether it fits.

Common mistakes include buying funds with good recent performance in the hope that it will continue, or trying to time market peaks and troughs and buy and sell at exactly the right time.

Focus on your goals

Collecting top-performing funds and trying to time markets can result in a portfolio that contains more risk than you’re willing to take, or a portfolio with little chance of achieving your investing goals.

You can avoid this mistake by working through your current situation and setting some reasonable goals, along with a plan based on your unique circumstances. Below you can find some of the items that such a plan may include.

 

Item

Here’s what you need to know.

Investment objective

How much money you need to achieve a goal, such as retirement.

Time horizon

The number of years you have to reach the goal

Risk profile

The level of risk you are willing to take to achieve your goal

 

Savings rate

How much you can invest at the start, and regularly thereafter

Asset Allocation

The broad mix of investment types you’ll use to achieve your goal.

Professional investors call this ‘asset allocation’

Monitoring

How your portfolio is going to be monitored and adjusted to keep it near its asset allocation target.

Key points

For investment success, investors should start by defining clear goals and developing am appropriate plan based on realistic return expectations to avoid unnecessary risks.

Plans may also change over time, because in the markets, just as in life, there will always be unexpected twists and turns. But by planning early, you are more likely to invest in line with your goals, you can avoid mistakes and, last but not least, enjoy the good feeling of not leaving your future to chance.

Other principles


Important information on investment risks 

Investing involves risks. The value of the investments and the resulting returns may rise or fall, and investors may suffer losses on their investments.

Important risk information 

Past average returns are no reliable indicator of future investment results. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. 

Important information 

Vanguard Investments Switzerland GmbH only gives information on products and services and does not give investment advice based on individual circumstances. If you have any questions related to your investment decision or the suitability or appropriateness for you of the product(s) described in this document, please contact your financial adviser.

The information contained herein is not to be understood as an offer or solicitation to make an offer to buy or sell securities in any jurisdiction where such an offer or solicitation is unlawful, or to persons to whom such an offer or solicitation may not legally be made, or when the person making the offer or solicitation is not qualified to do so The information does not constitute legal, tax or investment advice. You should therefore not rely on the content when making investment decisions.

The information contained in this document is for educational purposes only and is not a recommendation or solicitation to buy orsell investments.

Published by Vanguard Investments Switzerland GmbH.

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