Get the right attitude and investing is safe and easy

Expectations are resentments in the making, and we need the right attitude to stay safe when investing.

I learnt a while ago that whenever I felt really cross about something, it was usually because I had expected things to go differently and am pissed off with the unwelcome result.


  • Arranging for my super talented photographer son to have hours of time with my office team to get some fresh shots for the website, for him to lose the memory card before processing the pictures.


  • Dropping several (not so subtle) hints and priming a girlfriend to make sure he knows which one I like, size, colour and where to obtain – sorted – no he gets all bloody independent and imaginative and I end up with the present from hell!

It is hard to live without any expectations at all, but having a reasonable attitude about what can and can’t be expected helps me avoid all but the most sneaky disappointments.

When it comes to investments however, I manage my expectations like a pro – probably because in this particular area I am a pro – and I am happy to share some tips on how to manage expectations around investing so you too can anticipate realistic outcomes from great choices and avoid disappointment.

Often a Women’s Wealth member will ask which investment is best for them, but it isn’t easy for me to answer that question without knowing these things first:

  • Objective – what is the money for?
  • Shape of the return– do you need it back as a lump sum, staged amounts, ad hoc or income?
  • When – what time frame?
  • Flexibility – is there an absolute deadline or is there some flexibility?
Investing is more science than art or luck

Once you get the hang of what you want from your investment, grasp some fundamentals about how investments behave, then you can arrange things to deliver what you want when you want it.

It is far more science than art or luck. I think our members are relieved when they realise it isn’t that complicated after all, but they also understand why the original question of “Which investment is best for me?” is pretty difficult to answer without the context that financial planning brings.

It isn’t about comparing funds and picking a winner

The other loop I find investors stuck in is around investment return or the growth rate they want.  They find themselves looking at a list of funds and wondering: Why would anyone choose the one that does 4% per year over the one that does 9% a year?

The trick here is not to buy any investment based on how it has performed compared to others. Each fund is different and because they have different characteristics (see the asset types below) , they absolutely should deliver different results over different periods of time.

Diversification is the name of the game

A good investment portfolio takes advantage of these differences between the different types of fund to build a portfolio that is well diversified. Some funds do well when interest rates are rising, and others suffer in this environment.  Some funds excel when there are lots of investors with plenty to invest in long term projects with big future pay-outs, while others do better when investor focus switches to funds that are currently able to distribute profits.  If you always have some of each in your portfolio then you dilute extreme experiences associated with just one type of investment.

Obviously an ‘all or nothing’ bet may pay off big, but you must be prepared to lose big too. Most of the time, this scenario is one investors are seeking to avoid, they are willing to moderate expectation because they realise that they will always have some investment in the funds that are not currently top of the pops, as well as the ones that are; but they are safe in the knowledge that no matter what economic, diplomatic, social whirlpool we end up in next, they have a well spread portfolio that will capture the return from whichever fund thrives, and this will compensate for the fund that doesn’t respond well in those conditions. A smoothed return from diversification.

What does history tell us to expect from investments ?

Well this is where you need to get your head around how these different types of fund are likely to behave over different time periods.  This table looks back over 20 years at what £10,000 investment would have done depending on the level of risk in the portfolio.  You can see that the different risk strategies have a mixture of different asset types in them. We can back test how these assets would have behaved and show the best and worst and averages over the period.  As I said before it is way more science than luck or speculation.

So as you can see:

Cash – very spendable but will devalue against inflation over time – you can see the 20-year average annual return is only equal to inflation over that period.

Fixed Interest – These are long term loans to companies and countries and provide a nice predictable return but because the rate of interest is fixed these assets suffer in a rising interest rate environment, but they are less volatile than equities and give a better chance of competing with inflation than cash.

Property – this is generally commercial property in an investment portfolio rather than residential property, but it still has all the great characteristics we know and love- rental income, fairly predictable long-term growth, but the problem with property is illiquidity – that is to say it is long winded and expensive to buy and sell. You can’t have too much of it in a portfolio if you want to be able to cash in at any time – it can take months to sell a property holding.

Equities – now this is where the magic happens- you own a share, a portion, of a company. Companies exist to bring together stuff, talent, innovation and create something that is worth more than the sum of the parts.  Some do it better than others, and there is a massive range and diversifying across

  • countries
  • sectors
  • markets
  • currencies
  • size
  • cyclical characteristics
  • themes

all of which are vital to managing risk, but this can all be achieved by simply tracking a global stock index.  Simple!

You can lean into riskier areas such as emerging markets if you have the appetite for risk and a long time horizon so you can stick to the more predictable developed markets.

Once familiar with what to expect from different blends of assets you can start to define what you need from different investment pots. You can invest more confidently and maximise your return without setting yourself up for disappointment.

Cash is king in an emergency

One more really important point to make here – everyone needs an emergency fund.  We should all have an account with enough instant cash to cover 6 months of essential spending.

Then we need to work out what of our savings is earmarked for spending in the next 4 or 5 years – anything more than that in cash is a mistake because you lose out to inflation.

In summary:

  • Investing is way more science than art or luck
  • Diversification is the key
  • Map out your goals and plan your investments accordingly
  • Always have an emergency fund
  • Don’t invest money you plan to spend within the next 5 years and don’t keep more than that in cash unless it is your emergency fund.

With this attitude to money management and investing you set yourself up for success and minimise the potential for disappointment and resentment.

For more details on what is covered in this article you can do our FREE course – How to start investing. Sign up and go through to courses.

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