The Importance of Planning for Long-Term Investing Success

In this article, we look at how you can meet your long-term goals through prudent planning, without sacrificing the chance for higher than average returns

Retirement Planning Starts Early

As the saying goes, “If you don’t know where you’re going, you might end up somewhere else.” Planning by its nature begins with defining your long-term goals, such as when you want to retire, what you want to do in retirement, and how much you want to leave behind. With your aims made clear, you can begin to set about achieving them.

Saving is the first step to achieving any long-term financial goal, and the earlier you start the better. This may seem obvious, but time is one of the most powerful tools at the disposal of the modern investor. Thanks to the power of compounding, the longer one leaves money to grow, the faster it accumulates.

While time in the market is key, the actual growth rate of your portfolio is equally important, especially in a high-inflation environment. Ideally, we want higher returns without incurring unacceptable levels of risk.

Diversification with Private Markets

We’ve written elsewhere about the importance of holding a diversified portfolio. In public markets, this means holding a mixture of asset classes and sectors that will offset each other’s ups and downs. But what if the stock market as a whole is volatile?

The stock market is also referred to as the ‘public’ market because its securities are traded on public exchanges. However, of the approximately 333 million companies in the world^[1], only around 55 thousand^[2] (0.01%) are traded or ‘listed’ on any exchange.

In a more volatile environment, one option is to diversify outside public markets. In other words, consider private market investments such as private equity, private debt, and real estate.

Not only does this limit your exposure to public market volatility, but it also offers the opportunity for higher returns. Not being publicly traded, the value of private investments is not dependent on the movements in the wider public markets. Private companies are often at an earlier stage and have more room for growth.

Access to Private Markets

Investing in private market companies is harder than buying securities on an exchange. To ensure an investment has genuine growth potential and to understand the risks, a thorough investigation into the company and its management is needed. For this, pre-existing expertise in the field or sector in question is required.

As a result, private investments have in the past been restricted to institutional investors or ultra-high-net-worth individuals, with the resources to perform such due diligence. However, by working with an advisor or firm that has a track record in private markets, it is possible to gain access to opportunities without having to perform the onerous task of due diligence oneself.

A professional advisor or investment firm will not only have access to attractive deals, but will also be able to analyze and recommend appropriate options for a given investor in a given scenario.

Conclusion

The Family Office has a proven track record of supporting investors who are looking to boost returns and diversify risk through private market opportunities. We are seeing more interest in this area as the geopolitical environment becomes less predictable and the broader investing outlook less stable.

Make an appointment with one of our advisors to discuss your long-term financial goals and how The Family Office can help you achieve them.

^[1] Statista

^[2] World Federation of Stock Exchanges