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Basic Principles

I spend a lot of my time reading, although I try to avoid the sensational daily papers which tell us how many billions of dollars have been wiped off the value of the share market, the property market, the oil/coal/gold/you name it market.

I guess we are all attracted to opinions that match our own which is why I couldn’t help passing on to you the thoughts of investment “legend” David Svensen, best selling author of “Unconventional Success”.

In putting forward three basic investment principles he comments as follows:

  1. Long term investors build portfolios with a pronounced equity bias (i.e. shares)

  2. Careful investors fashion portfolios with substantial diversification

  3. Sensible investors create portfolios with concern for tax considerations

I have never heard anyone disagree with principle #2 but I do recall hearing of one investor who stoutly defended her diversification because the 17 rental properties she owned were all in different suburbs of Sydney!