Goal setting Sunday Times, 8 April 2007 To become a successful investor one needs to understand the principles of long term investment which include setting goals, managing risk and investing regularly. In goal setting one requires a clear understanding of your aims, your own time horizon for achieving your objectives and the level of risk which is suitable for your circumstances. One often finds for instance, that investors in their 40-50’s are under invested in equities and miss out on the high performance of this sector or older investors who may have too high a market risk in their portfolio. Managing risk is a key element and here asset diversification can significantly lower the risk while still providing excellent returns. Ideally one should spread your capital across the various asset classes and market segments which will offer protection from a downturn in one particular investment. This includes achieving a spread geographically as well as a mix of investment styles. Successful investors stay focussed on their time horizons – they invest for the longer term – and largely ignore the short term market fluctuations. Trying to time the market will not achieve higher returns. Investing regularly is another key element. Successful investors are usually highly disciplined taking advantage of monthly debit order facilities to invest on a regular basis. They also understand the benefits of compounding and automatically re-invest their dividends and other income received.