We are all different when it comes to investing. Our individual goals and objectives will dictate the focus of our investment strategy. Regardless of our objectives, if we invest in assets, particularly growth sectors such as equities and property, we do so for the long term. What is long term?

5 years +. Why?

The reality is that growth markets cannot and will not continue to rise year after year. As it is impossible to predict if and when markets will fall, we cannot afford to invest our money for just 1-2 years, for if markets happen to fall during this time we could stand to lose money. Investing with this time frame in mind becomes a gamble.

Of particular focus recently has been the rollercoaster performance of the Australian sharemarket from November 2007 to present day. During this time we have seen the market return fall by 55% only to recover by 56% and fall again by 11%. This has been unsettling to say the least, but judging market returns using such a narrow timeframe is dangerous. After all, between 2003 - 2007 the market returned a staggering 156%.

Taking a longer term view, history has shown us that on average markets tend to rise 4 out of every 5 years; hence, staying invested over a longer period can reap rewards.

When we invest in the share market we must remember what we are investing in. A share is not a piece of paper we track on the All Ordinaries Index as if it were a game. Buying a share means we are purchasing a small part of a listed Australian business. In the short term many external factors can influence its share price, something as simple as a negative consumer confidence report from the U.S, although it bares no direct relationship with the company invested.

We must learn to ignore the external \'noise\' that tends to drive fear into the market. Over the longer term what will drive a company\'s share price is its ability to perform and grow, the \'fundamentals\' of the business.

It is a reality that investing in listed companies allows us to track their performance almost every minute of everyday. My advice here is simple, don\'t. By comparison, people tend to worry less about the property market because it is not valued in the same way as shares. Imagine if you could login and view the value of your property everyday based on comparable sales and auction clearance rates in your local area, no doubt the value would fluctuate similarly to that of the sharemarket.

In the same way that a person buys a quality property with a quality rent paying tenant, we buy quality Australian companies with a track record for paying strong and reliable dividends, regardless of short term price fluctuations.

Again we look to wise words of the world\'s most successful investor, Warren Buffet never attempt to make money on the stock market \"buy on the assumption that they could close the market the next day and not reopen it for five years\".

Andrew Hewison is a certified financial planner with Hewison and Associates Wealth Management | 9682 1900
andrew@hewison.com.au
www.hewison.com.au