Investing for success: Key strategies to build long-term wealth

In a world of financial uncertainty and rapid market changes, long-term investing success can be achieved by focusing on the areas and strategies that are within your control. You've undoubtedly heard that investing is an excellent way to build wealth, but there's more to investing than simple tricks like "buy low, sell high". 

This episode dives into a compelling conversation with Michael Keaveney, Vice President of Managed Solutions at CIBC, as he describes the key habits of successful investors including investment diversification, investing regularly and staying disciplined amid market volatility. 

Both novice and seasoned investors can leverage the insights and strategies discussed in this episode to enhance their portfolio and effectively manage their financial future. 

Here are three reasons you should listen to this episode:

1. Learn why investors should prioritize their own financial objectives and maintain realistic expectations about returns.
2. Discover how a well-diversified portfolio can manage risk and enhance returns.
3. Understand the benefits of a regular investing plan.

Resources

CIBC Asset Management insights hub: Preparing your portfolio for market volatility

CIBC Smart Advice hub: Three tips to make your regular investments work harder 

CIBC Investor’s Edge poll: Many Canadians’ financial strategies overlook investing 

 

Episode Highlights

[00:22] Economic Outlook and Market Conditions

• Optimism for investors is growing, with 2024 poised to bring a resurgence in market performance.
• Despite past challenges with inflation and rising interest rates, the future looks promising for the market, especially when considering investment diversification.
• CIBC's economic team expresses cautious optimism about the economy's resilience and its positive influence on investments.
• The value of the Canadian dollar remains an important consideration for crafting effective investment strategies.

[01:17] Carissa: “Everyone has a different investment goal, different appetite when it comes to volatility and duration in the market.”

[02:31] Realistic Expectations and Investment Diversification

• Investors need to understand and focus on their individual goals. Set realistic expectations for their success and timelines.
• Educating yourself about the market is crucial. As an investor, remember that the market is complex and always affected by various factors.

[05:50] Michael: “Markets are not linear in the return path that they generate for you. A lot of your overall return comes from a relatively small number of really good periods. And we don't know exactly when those best times will come.”

• Market volatility is an inherent feature, not a flaw, of the market. Investors should prepare for and accept this volatility as part of the investment process.
• Many investors lose market opportunities because of jumping in and out of the market. People tend to jump out after the worst days and miss the best time.
• Shift your investor mindset. Understand that short-term downturns will happen instead of jumping in and out of the market.

[07:56] Why You Should Look Into Investment Diversification

• Diversification remains a powerful strategy for managing risk and enhancing potential returns.
• A well-balanced portfolio can smooth out the ride by reducing overall volatility.

[08:42] Michael: “Diversification reduces volatility due to less than perfect correlation between asset classes.”

• The approach to balanced portfolios has evolved, now incorporating broader foreign exposure and innovative alternative investments.
• Constructing a balanced portfolio involves adapting and fitting expert ideas from different asset classes into your diversified portfolio.

[14:25] Behind the Scenes of Investing

• Short-term market dips are natural. Staying invested through market cycles is often more effective than trying to time the market.

[18:21] Michael: “There's always going to be something in the portfolio that is the laggard. That's the whole point.”

• Regular investing is crucial in order to achieve key financial goals such as a comfortable retirement. A regular investing plan can help you finance your whole lifetime.
• To achieve lo