How to make good money decisions

When you embark on life as an expat the everyday can be exciting. All the differences in living can make the mundane seem new and fun - the excitement of cultural differences. The downside to this is the stress of not necessarily knowing how things are done in your new home, how to, as they say in the Netherlands, “doe normaal” (the full saying translates as: act normal, because normal is crazy enough!).

Start making good money decisions with Black Swan Capital

Managing your money is one area where not understanding how things are done can have a material impact and where it is vital to understand all of the details.

At Black Swan Capital, they can guide you to make the right decisions for you. Here are some ways they can guide you:

Constructing and implementing a plan

The first is constructing and implementing a plan specifically for you, for where you are right now in your life. Whether you are adapting a well-thought-out plan to your new life abroad or taking the opportunity of the change in your life to put some objectives and structures in place, similar principles apply.

You will need to consider and centre all actions around your objectives, what you are trying to achieve in the short and the long term. You need to adapt this plan to where you are living now, and consider the impacts of the passport you hold, and any other reporting or tax obligations you might have around the world. There are many other layers of consideration, and you need to be mindful that most expats need flexibility and liquidity - the ability to make changes as life changes - without stress and without access restrictions or penalties.

Black Swan Capital specialises in working with international professionals and they are all expats as well, making them the perfect company to help you out with your plan!

Blocking out the noise

The second area Black Swan Capital really adds value is blocking out the constant noise. Whenever the investment markets and the economy are being written about - and this has held true for 25 years for Black Swan - there is always something happening that has an influential impact on the markets and short-term investment returns. These events or factors are often described as extraordinary, but if you take a step back and look at the longer term, you see there is a consistent sequence of events, one after the other. Some are positive, some negative.

For this to make sense, you need to agree on the principle that investment markets go up over time, but not in a straight line. Another way to say this is that time reduces volatility and the likelihood of losses, and what looks like bumpy markets across a short time period like a month, can be smoothed out when looking at a long time period, like 10 years.

What might look like this in the short term:

Will look more like this in the long term:

Therefore, your responses to short term market movements should be to look at your investments and what is happening in the world relative to your goals and the timeframe of those goals. If your key goal is 15 years away, a short-term fluctuation now might be irrelevant. This is easier to write about than it is to do in practice.

One of the ways Black Swan Capital adds value for you is that they interpret, distil and apply the relevant information while excluding the noise, keeping you on track to your financial goals.

Staying on track

Third, is to help you adapt and stay on track with your goals and to avoid the pitfalls of investor biases, like the momentum investor.

When you shop, you are quite comfortable with the idea of buying items when they are on sale rather than when they are at their maximum price. When it comes to investing, though, if you follow the momentum investor bias, you are much more inclined to wait until an investment has already gone up (increased in price) before investing.

It is not difficult to understand the rationale. If you wait until something has increased in price, it feels like a proven and safer investment - it has a track record. What it often means, though, is buying at the top of the market. One of the most often repeated phrases when giving financial advice is that past performance is no guarantee of future performance. Just because an investment has risen in value does not mean it will continue to rise at the same rate.

Following this pattern, the investor bias kicks in again when prices drop, meaning you may be less likely to buy, even though that asset may be considered as being "on sale". In fact, you may feel inclined to sell. The momentum investor gets increasingly worried as prices drop.

Black Swan Capital are firm believers that it is not possible to time investment markets, consistently and accurately. They believe there is much more value that you can add to your investment (at a considerably lower risk) by consistently following a structured plan across market cycles with intelligent, informed tactical adjustments, than there is in trying to time peaks and troughs.

It is important to remember that the purpose of investing is to achieve your long-term objectives. Investing is a means to an end, not the end in itself. If your focus is the long term, focus on the long term.

Contact Black Swan Capital

Seeking advice from qualified professionals can have a profound impact on your life now and into the future: at Black Swan Capital they are doing this every day and they can help you achieve your goals. Feel free to check out more information at www.blackswancapital.eu or contact them directly for an initial discovery call at no cost by emailing them at info@blackswancapital.eu.