Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn


8 top investing tips

Ben Johnson, CFA  |  16 Apr 2019Text size  Decrease  Increase  |  
Email to Friend

Six positive behaviours and two you should avoid in keeping your portfolio growing

Sticking to what you know, keeping a written plan and tuning out unnecessary market commentary are among these top investing tips from Ben Johnson, director of passive strategies, Morningstar US.

He outlines six positive behaviours you should practise and two you should avoid in helping ensure your portfolio keeps growing, even within a more difficult  market environment.

1. Save

You can't invest money until you've saved money. Saving is all the more important in the context of the depressingly low expected returns we face today. The market likely won't do the heavy lifting for you over the next few years, so you will have to shoulder more of the burden.

2. Keep it simple

Don't stray from your circle of competence. It's all too easy to be lured outside your wheelhouse by friends, neighbours, or marketers. Complexity is costly and rarely yields benefits to the consumer. This applies to investment products, home appliances, you name it. The further you stray from your circle of competence, the more likely you will get lost.

3. Minimise costs

Fees subtract directly from your investment returns. Be stingy when it comes to the price that you pay for investment products, as well as the price you pay for advice.

4. Be tax-aware

Don't give the tax office any more of your money than you have to. Look for tax-efficient investments such as exchange-traded funds, and consider employing tax-loss-harvesting strategies, which involve selling securities at a loss to offset capital gains tax liabilities. 

5. Keep a decision journal

Investing Compass
Listen to Morningstar Australia's Investing Compass podcast
Take a deep dive into investing concepts, with practical explanations to help you invest confidently.
Investing Compass

Scribble some notes to document the reasons behind your buy and sell decisions. This will keep you honest, help you learn from your mistakes, and give you a more sober view of the underpinnings of your successes. Was this down to skill or luck?

6. Set aside some "funny money"

Allocate around 5 per cent of your portfolio for dabbling purposes. Use it to buy that hot stock your neighbour told you about.

You'll win some and you'll lose some, but most importantly, you might learn some valuable lessons and prevent yourself from doing silly things with your serious money.

7. Try to avoid overpaying

Yes, this is just restating number 3 above, but the importance of keeping costs under control cannot be overstated.

8. Look

Try not to pay too much attention to what is going on in the markets and how they are affecting your portfolio on a day-to-day, week-to-week, or even month-to-month basis.

Turn off the TV and maybe pick up a good book instead: I recommend Jack Bogle's Little Book of Common Sense Investing.

This is exceedingly difficult, but tuning out short-term noise can keep you focused on your long-term goals and prevent you from tinkering with your portfolio at exactly the wrong times.


is director of global exchange-traded fund research for Morningstar.

© 2022 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

Email To Friend