{"id":22771,"date":"2007-07-29T10:41:00","date_gmt":"2007-07-29T10:41:00","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=291"},"modified":"2007-07-29T10:41:00","modified_gmt":"2007-07-29T10:41:00","slug":"el-inversor-resiliente","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/el-inversor-resiliente\/","title":{"rendered":"The Resilient Investor."},"content":{"rendered":"
\"\"<\/a>Let me start by saying that the observations I am about to make refer to an average investor with average capabilities and little preparation for the financial world \u2013 in other words, the majority of the population who have sufficient purchasing power to consider investing beyond simply making ends meet. Naturally, many readers will stand out from this average profile and should not feel that this applies to them. However, based on our experience with consultations of all kinds, we can confirm that what happens to the investors we are about to discuss is, unfortunately, all too common. We believe that by helping to identify the problems, we are taking steps towards resolving them or avoiding them in some way. Just as there is companies<\/a> specialising in helping other companies become more resilient<\/a>, it is also vital from the point of view of Counsellors<\/span><\/a> that we can make the investor more resilient.<\/div>\n
Many investors\u2019 assets are subject to the sectoral cycles that their own salaries help to offset. These investors have a more or less fixed income from their employment, and on that economic basis<\/span> take their first tentative steps into equities, investments in alternative energy, property, mixed financial products recommended by their fund managers, and so on. Most of them compulsively switch from one type of investment to another, depending on how things have gone for them. It is common to find people who, after a a year of misfortune<\/span> After getting burned in the stock market, they spend a few years vehemently denouncing the vagaries of the markets. They usually swing from one extreme to the other, investing excessively in property or even in fixed-income products with an annual 3% yield. But everything passes, and the temptation to see how their friends have made a fortune five years later, in any equity fund, eventually erases from their memory the bitter words uttered by their financial advisor: \u00abThe correction is proving more severe than expected, but very good opportunities are now beginning to emerge; you should inject more capital to average down and capitalise on the falls\u2026\u00bb. Inevitably, just as they decided to cut their losses and change strategy, the stock markets began their spectacular recovery. Shortly afterwards, the bewildered but proud average investor (none of us likes to admit our faults and failures) will try to offload a pile of properties accumulated to the point of obsession and now overvalued, right in the midst of the sector\u2019s slump. And not just for the sake of switching strategy towards the stock market and \u00abstop messing about at 3%<\/span>\u00ab, but because the mortgage commitments already entered into are becoming dangerously burdensome when property prices stop rising by 25% a year between the off-plan purchase and the handover of the keys.<\/p>\n

The same applies to other investment strategies involving various financial products: when you lose out on oil, you move on to precious metals, preference shares, currency speculation, and so on. Even if we pick the right products and enjoy months of prosperity, our own fund managers and advisers (little angels\u2026) will see to it that we switch from one to another depending on \u00abthe deal of the day\u00bb they need to sell. Investments in other people\u2019s businesses can end up putting them \u00abkeep your leg on top so they can't get up<\/span>\u00ab.<\/p>\n

The result of these \u00abstrategies<\/span>\u00bb investment strategy over the decades: a whimsical, disjointed, haphazard and, of course, expensive mishmash. A series of sharp turns in their investment strategy that will have nothing to do with their families\u00ab life goals. That \u00abI've put my foot in it; I'm off there to make amends<\/span>\u00ab...it won\u2019t end in tragedy if they at least have some paid-off property left over from their time in the property market.\u201d.<\/p>\n

Some of you might think we\u2019re over-dramatising things, since if, come our old age, we still have a property or two and a few other assets, it will mean we haven\u2019t done too badly after all, despite our erratic path. Here I must disagree, because we must bear in mind what we said at the start of this post: the ability to generate income from our work throughout our lives. The income we are able to generate throughout our working lives, the passage of time and compound interest work wonders. If we take all this income \u2013 obviously after deducting our family\u2019s expenses \u2013 the surplus generated by even very moderate compound interest would surprise more than a few people. Many families would probably have even more assets than they have accumulated after cyclically risking, gaining and losing their surpluses in various investments and businesses.<\/p>\n

What we mean by this is simply that many adventures<\/span> For the majority of investors, their investments would end in disaster if they did not have a surplus from their employment to help them, from time to time, mitigate the losses they suffer on the stock market, in business, with financial products and\u2014though some may still not believe it\u2014in property ventures too. If we were to strictly separate our earned income from our investment portfolio, we would see that only those investments made with a certain degree of judgement and rigour are self-sustaining. The rest, at one point or another in our lives, usually require an injection of funds from our salaries or inheritances. This false resilience<\/a> (in the psychological sense of the term) stems from the regenerative capacity of the income derived from the investors\u2019 own work. If we separate this earned income from our investment portfolio, it will likely become clear that our ability to bounce back after an investment setback is not what it seems. Many investors are not truly resilient without the support of their salaries; therefore, they need independent financial advice or a radical change of strategy, for the sake of their families\u2019 future. In many cases, one\u2019s earning capacity must bear the brunt of an individual\u2019s investment errors and failures, minimising them to the point of distorting our view of our own wealth-creation capabilities outside of our work.<\/p>\n

If we maintain this strict separation between our two economies, our investment ventures should be financed through loans. Thus, \u00abinevitably<\/span>\u00bbThe investment itself should be able to pay for itself, clearly demonstrating our ability to make sound investments throughout our lives. An old friend used to say: \u00abIf a business can't even cover the interest on its bank loan, what a rubbish business.<\/span>\u00bbWe could then set aside the surplus from our professional income and reinvest it in fixed income<\/span>, as we would already be assuming the risks associated with other types of investment independently. In this way, we would create genuine, fully protected savings plans<\/span> for our later years, whilst remaining aware of our limitations and capabilities when it comes to investing.<\/p>\n

As for the ability to create wealth, I would add: <\/span><\/p>\n

\u00abWe\u2019re all capable of making sound investments; we just need to seek advice from someone who can help us avoid making a lot of bad ones\u2019<\/span>.\u00bb<\/p><\/blockquote>\n

If we manage to do that, we will have achieved the status of Resilient Investor<\/span>, in one of its meanings referring to the ability to thrive in an unhealthy environment. An interesting concept, don\u2019t you think?<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

Vaya por delante que las reflexiones que voy a hacer a continuaci\u00f3n se refieren a un perfil de inversor medio con capacidad media y preparaci\u00f3n para el mundo financiero baja, o sea la mayor\u00eda de la poblaci\u00f3n que tenga poder adquisitivo suficiente para pensar en invertir m\u00e1s all\u00e1 de llegar al final de cada mes. […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"class_list":["post-22771","post","type-post","status-publish","format-standard","hentry","category-sin-categorizar"],"_links":{"self":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/22771","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/comments?post=22771"}],"version-history":[{"count":0,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/22771\/revisions"}],"wp:attachment":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/media?parent=22771"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/categories?post=22771"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/tags?post=22771"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}