Stick to your plan in good times and bad

Independent financial planner Ben Westaway gives some practical advice for securing your financial future in our latest Money Master Class.

Ben is managing director of Jessop Financial Planning, an independent financial planning firm in Sheffield.

He says:

1. Create a written financial plan and review it at least annually: this will mean that you keep your goals in focus and you can monitor your progress towards them.
2. Invest simply and at low cost: many of the investment problems that people come to us with are the result of overly complex and high charging investments.
3. Stick to your investment plan in good and bad times. Benjamin Graham (Warren Buffett’s mentor) said that ‘the investor’s chief problem – and even his worst enemy – is likely to be himself’.

We say:

You can’t go far wrong if you follow the advice of Warren Buffett’s mentor! Many people panic in times of stock market strife, selling out of investments as soon as they take a tumble and buying back in once investments start to recover, when the price is higher – this is exactly the opposite of what you should do.

Of course buying and selling investments at the wrong time can cost you dearly, but so can charges, and Ben is right that you should keep it simple. If your investments are simple you are more likely to understand how they work and pay a lower cost – highly complex investments should be avoided by novices.

Monitoring your progress is a key point – if you are looking towards long-term goals then you are less likely to be perturbed by short-term stock market fluctuations and make a costly mistake.

Check out more Money Master Classes:

• Ignore day-to-day shifts in the stock market
• Keep costs low and don't squander tax allowances
• 3 simple rules for financial success