Did you miss it?
No, I'm not talking about the Reserve Bank of Australia (RBA) decision today on interest rates.
Whatever they do today, the result will be heard all over the country. You won't miss it.
I've had my say. Interest rates are staying low for longer. That's all you need to know. Invest accordingly.
Instead of focusing on today's interest rate decision, here are seven far more important tips you might have missed, each of which can make a material difference to your wealth…
1) Yesterday, the S&P/ASX 200 Index rose for the eighth day in a row.
The old saying the share market climbs a wall of worry has never been truer. Since this rally began on January 21, the index has jumped 5%.
The trend is continuing today. Nine in a row. Up, up and away.
And the share market might only just be warming up. As quoted in the AFR, AMP Capital chief economist Shane Oliver said that since 1980 a positive share market result in January led to positive gains for the year 75% of the time.
You are on board for the ride, right?
Share markets rise when interest rates are low. Go figure. It has something to do with comparing the attractiveness of term deposits to dividend yields. But you've heard all that before.
2) If timing the market is your thing — trying to sell at "the right time" to avoid losses — you likely just missed the 5% rally.
Retail investors have the unhappy knack of buying high and selling low.
They panic when markets fall, fearful of the next market crash, or the next GFC.
I have good news. Genuine market crashes come along once every 20 odd years. I don't think I'll experience anything like the GFC again in my investing lifetime, but never say never. On the bright side, the GFC was only 5 years ago.
Time, and the odds, are on our side.
3) Don't under-estimate how much luck plays a part in your investing success.
Those people who bought Commonwealth Bank of Australia (ASX: CBA) shares at its float in 1991 got very lucky.
At the time, they weren't to know Australia was about to embark on a 24-year unbroken period of economic growth.
At the time, they weren't to know Australian house prices would jump through the roof.
At the time, they weren't to know China was soon to embark on industrial revolution on a scale and speed never before witnessed, accompanied by one almighty mining boom here in Australia.
Then again, as in life and career, you make your own luck…
Congratulations to all those self-made Commonwealth Bank investing millionaires. You deserve every cent. You took the risk, held through numerous corrections and the GFC, and today you are reaping the rewards.
Lucky you.
4) There's nothing lucky about getting rich buying and holding great companies.
There's no shortage of commentators quick to declare the death of buy and hold investing.
This type of rubbish is usually peddled when markets are in turmoil, and by people who have a product to sell — high frequency trading, charts, CFDs, forex, black box trading systems, even brokers.
Ask any investor who bought Woolworths Limited (ASX: WOW) at their float, who reinvested dividends, and held all the way through to today what they think about buy and hold investing. It's a very dry argument.
Don't get me wrong — here at The Motley Fool, we have a product to sell, too. The BIG difference is alignment.
As a subscription product, we get paid once when you subscribe to Motley Fool Share Advisor, and once again if you choose to renew your subscription. And if we don't do our job well — helping ordinary Australians invest better — you won't renew.
That's it.
We don't get paid one jot whether you buy one of our recommended stocks, all five of the dividend-paying stocks we've just highlighted in our popular Income Extra feature, or all 20 odd ASX stocks we currently rate as buys. We have no interest in churning you in and out of shares. On the contrary, like Warren Buffett, our preferred holding period is forever.
We don't get every pick right. Heck, only recently we advised Motley Fool Share Advisor subscribers sell a position, in the process locking in a loss for our scorecard, and for the people who took our advice.
No-one likes losing money. We feel more pain when our members lose money after taking our advice than we do in losing our own personal money. Luckily our winners far outweigh our losers.
5) Expect to lose money.
In the investing game, you're doing incredibly well if six out of every ten shares in your portfolio are winners, or a 60% strike rate.
But if you are not holding those winners, letting them run into truly massive winners, like Commonwealth Bank has been for those people lucky enough to buy back in 1991, you'll likely end up being an investing loser.
By not letting your winners run, the investing odds are stacked against you. The reason why a 60% hit rate wins is because your winners can go up hundreds and thousands of per cent, yet your losers can 'only' fall 100%.
If you're constantly booking small profits in your winners — likely going by the ridiculous maxim that you can't go broke taking a profit — you're only kidding yourself. Take a trip to the casino instead.
That said, not every company is suitable for buying and holding for the very long term. For every huge winner like CSL Limited (ASX: CSL) there have been umpteen disasters, including high profile companies like Ten Network Holdings Limited (ASX: TEN) and Arrium Ltd (ASX: ARI).
Just avoid the losers, huh? Easier said than done. Better advice is to buy well — invest in great companies, with sustainable competitive advantages, run by outstanding managers, and with huge growth runways ahead.
One example? Warren Buffett's sidekick Charlie Munger has said search engine giant Google has a huge competitive advantage, going as far to say he has "probably never seen such a wide moat."
Another one? Facebook. I own shares in both companies. Lucky me.
6) The three most dangerous words in investing are "I missed it."
As I said, I own Google shares. It is a buy recommendation on the US-side of the Motley Fool Share Advisor scorecard. It's a classic buy and hold investment.
I didn't buy Google when it floated back in August 2004. I didn't buy it during the GFC, although I did make some money selling put options on the company. I bought it much later, paying a higher price.
But I'm still sitting on a substantial profit on my Google position today. I missed nothing. And I expect that profit to grow as Google continues to grow, for many years to come.
Here in Australia, one of my biggest winners, both in percentage terms and importantly, dollar terms, is Motley Fool Share Advisor ASX recommended stock, Vocus Communications Limited (ASX: VOC). I bought the stock after it was recommended to our paying members.
I missed buying Vocus in 2010 at less than 50 cents per share. I bought at around $1.60 in 2012. It didn't matter one jot that I paid three times more for the shares than I might have done in 2010.
Today, my Vocus shares are up close to 300% from when I bought them, as they would be for Motley Fool Share Advisor members who bought around the same time as me.
I missed nothing. Lucky me.
7) Don't invest by looking in the rear-vision mirror.
Related to the above, it's the future that counts, not yesterday's share price.
The S&P/ASX 200 Index is up strongly over the past eight days. Today, as you look forward, that means nothing. It's the next five, 10 and 20 years that count. You've missed nothing.
With interest rates this low, and expected to stay low for quite some time, as you look ahead, ask yourself where's the best place for your money now?
Gold? Thanks for reading.
Investment properties? Good luck buying at these elevated prices, and with those pesky tenants. I hope they pay on time, every single month.
Term deposits? Safe, but losing to inflation, plus you pay tax on the income.
Bitcoin? No comment required.
Some black-box "investing" software, costing many thousands of dollars, but promising the world? Once you've tried it, and lost tens of thousands of dollars trying to follow the backward looking signals, we look forward to welcoming you at Motley Fool Share Advisor.
The share market? Grow your capital, earn income via dividends, and get legal and generous tax breaks courtesy of fully franked dividends.
You decide. Good luck.
