The number 400 carries deep significance. It represents completeness, divine perfection, and liberation from bondage – much like how sound financial planning offers a path to freedom from money worries.
As we mark our 400th edition of Canny View in your trusted local paper, I wanted to revisit some principles of timeless investment; and, how you can use them to avoid learning financial lessons the hard way.
Back to Basics: The KISS Principle
‘Innovation’ relentlessly marches forward in this modern world of AI-driven trading, cryptocurrencies, and complex derivative products. When everything seems shiny and promising, it’s tempting to chase the next big thing.
But after 400 editions of sharing financial wisdom, I can tell you that one principle stands resolute: Keep It Simple, Stupid (KISS).
Like the steady hand of time pulling us week after week to this milestone, the most successful financial strategies are often the most straightforward – and (hopefully not like our previous articles) they’re usually not that interesting at all.
There’s such a thing as doing too much… and it usually looks like hopping around after hot picks, instead of moving slow and steady.
Long-term investing isn't about finding the next moonshot investment or timing the market perfectly. It's about consistency, discipline, and patience.
Think of your investment returns as planting a kauri tree. You wouldn’t check its growth daily, or expect it to be robust and towering after just a short while - you would trust in time and nature to do their work in delivering results.
Case in Point: Kiwi Investment Disasters
Recent years have shown us the devastating impact of chasing "get-rich-quick" schemes. The tales of financial devastation we've witnessed have been heartbreaking:
Cryptocurrency Chaos
Local families mortgaged their homes to invest in cryptocurrency schemes that promised astronomical returns. Unfortunately, these were unrealised.
One Christchurch couple lost $450,000 – their entire retirement savings, and home equity – in a crypto scheme that promised "guaranteed weekly returns." The mental health impact was severe, leading to depression and the breakdown of their 30-year marriage.
Property Speculation Fever
The recent property boom saw many Kiwis leveraging multiple properties through interest-only loans. Alas, when interest rates rose and values fell, the dream turned into a nightmare. A Wellington investor who accumulated six properties in 2021 now faces negative equity, and sleepless nights worrying about mortgage payments.
Binary Options and Forex Fantasies
Sophisticated-sounding trading platforms promised "guaranteed returns" and easy wealth. One Auckland family lost $180,000 in what turned out to be an overseas trading scam. The father, a successful business owner, fell into severe depression after realising his retirement dreams had vanished.
The Ross Asset Management Tragedy
This notorious fraud promised returns of 25% or higher, attracting many intelligent, successful Kiwis predominantly from Hawkes Bay, Whanganui and Wellington.
The collapse revealed a $115 million Ponzi scheme, destroying retirement plans and triggering anxiety disorders in many victims who now struggle to trust any financial advice.
While all these investment disasters may seem obvious in hindsight, they share a common thread: complexity, disguised as sophistication.
I’ll put it this way: If you can't explain your investment strategy to your ten-year-old, it might be time to reassess. The most successful investors in our community are often those who stick to simple, understandable investments and resist the urge to chase the next big thing.
Stick With the Principles That Keep Proving Themselves
In our 400 editions, we've seen countless market cycles, economic shifts, and global events that tested investors' resolve.
Those who succeeded weren't necessarily the smartest or wealthiest, and often weren’t the quickest cab off the rank – it was those who had stayed the course under sound guidance.
Avoiding gaining wisdom the hard way can really be as simple as sticking to tried-and-true methodologies. Like the biblical story of 400 years of bondage followed by liberation, financial freedom comes through adherence to proven principles:
Regular Saving: Just as we like to think we’ve delivered value with every edition of Canny View, regular contributions to your investments build wealth over time. Start with 10% of your income and increase it gradually – the more consistent you are, the easier saving gets.
Diversification: Spread your investments across different assets and markets to help buffer them from market turbulence – when one area goes down, another is already rising. Don't fall for the trap of putting all your money in a single "hot" investment.
Cost Management: Keep your investment costs low. A 1% difference in fees can reduce your retirement savings by hundreds of thousands over decades.
Long-term Perspective: Think in decades, not days. The market's daily noise is just that; a buzz that matters far less than your long-term strategy.
Working with the Professionals: Just as top athletes need coaches to reach their peak performance, your financial journey benefits from professional guidance. Working with a trusted financial adviser can keep you on track even when emotions run high as markets dip low.
The fundamental truths of financial planning remain unchanged, even after 400 articles with all different examples and scenarios.
Markets will rise and fall, new investment products will emerge, and economic conditions will shift. And much like the enduring wisdom found in ancient traditions, the basic principles of sound financial management stand the test of time.
Your Next Steps
Consider this 400th edition a milestone in your own financial journey.
If you haven't already, seek out a qualified financial coach (a qualified financial adviser) who can guide you through the complexities of modern investing, while keeping you grounded in time-tested principles.
Remember, financial freedom isn't about getting rich quickly – it's about building sustainable wealth through disciplined, simple strategies. Just as we've reached this significant milestone through consistent publication, you too can reach your financial goals through steady, purposeful action.
In an age of increasing financial complexity, perhaps the greatest wisdom lies in simplicity. Here's to 400 more editions of helping Kiwis navigate their financial futures… one simple step at a time.
· Nick Stewart (Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha) is a Financial Adviser and CEO at Stewart Group, a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions. Article no. 400.
· The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz
