Basic advise

Define clear goals and know why you invest.

As you define your financial goals, you create the necessary basis for sound investment decisions. Clarify your medium and long-term objectives. On that basis, you can work out an investment programme likely to help you meet your targets.

Know yourself.

Do you have a saver's or a gambler's nature? If losing a 20-franc note makes you nervous, you may wish to privilege the slow but safe path of low-risk investments. On the other hand, if you are not afraid of taking short-term losses in order to book long-term gains, less risk-adverse investments might be of interest to you. Nevertheless, remember that all financial investments bear a certain degree of risk exposure.

Start early.

To give your investments time is the soundest approach. When you start investing, do not expect quick returns. It is a proven fact that it takes time for capital to generate returns successfully.

Make a habit of saving and invest often.

The best way of meeting your financial objectives is to save regularly. Large savings contributions are not necessary. It is easier to put smaller sums aside every month than to invest a large sum once a year. Saving fixed amounts every month to buy investment fund units is advantageous. By saving progressively, you buy more fund units when their subscription price is low and less when it is high. As a general rule, this enables you to reduce the average per-share cost of your investment.

Diversify your portfolio.

It is unwise to place all your eggs in one basket, just as it is not advisable to place each egg in a different basket. A sound investment portfolio is designed to protect you against market turbulence while ensuring an attractive long-term performance. A diversified portfolio is invested in different asset classes (stocks, bonds, etc.) as well as in different industry sectors and geographic regions. Be aware that to attaining this degree of diversification, requires only a few funds.

Be patient.

By holding your investment fund units over the long term, for five years or more, you may benefit from long-term market trends. Several studies have indicated that investors who opt for a strategy of holding their investments generally achieve a stronger portfolio performance. By buying and selling in the short term, you run the risk of being out of the market during a rise, which is likely to have a substantial negative impact on your investment performance.

Do your investor's homework.

As soon as you have set your financial objectives, select the investment vehicles best adapted to achieving them. Gather information from various fund providers: all will offer you various brochures. Compare the fund products of various providers. Before buying into an investment fund, it is a good idea to read the fund prospectus. Subscribe to investment-fund related publications and remember that the leading newspapers' financial pages offer a wealth of information on the subject.

Prefer investments with stable and consistent historic performance.

Reliability should be preferred to short-term performance. A fund's performance over five years is much more revealing of its quality than a one-year performance assessment.

Make comparisons and avoid paying excessive commission rates for the subscription and management of your fund units.

Bear in mind that your performance is diluted by fees and commissions. Study all costs billed to the investor prior to selecting a fund. Some institutions charge sales commissions of up to 5%. Factoring in a management fee of 2% and an inflation rate of 2% on top of that amount means that the fund's performance will need to exceed 9% per annum before providing any returns to the investor.

Adjust your portfolio over the years.

You select your investments according to your current objectives and situation, which are likely to vary over the coming years. You should adjust your portfolio in line with these changes.

Protect your purchasing power.

Remember that to preserve your purchasing power, your investment performance must at least match the rate of inflation. You must therefore select investments whose growth rate exceeds inflation.