..... a valuable tip he received more than a decade ago when learning to ride a river on a kayak.
The advice was straightforward: Avoid focussing on the rocks and other obstacles. Rather, concentrate on the "space between the rocks".
However, he didn't heed the tip and flipped upside down in the icy river.
In a recent article, Focus on the opportunities, not the shoals, Richards writes that investors experience a similar challenge when trying to maintain their focus despite all of the noise in the market about what could go wrong.
"Unfortunately, devoting all of our attention to the financial rocks," he emphasises, "makes it difficult to see the opportunities we have some actual control over."
Investors have faced a series of financial "rocks" in recent weeks to potentially throw them off course.
Besides the challenge of investing in a low-interest environment, there have been the headlines about the Greek debt crisis, the state of the Chinese share market and the latest iron ore price - to name just three.
In turn, investor concern is being reflected in heightened volatility on world share markets.
While investors can't control the markets or the emotions of other investors, there is plenty they can control.
As discussed in Vanguard's principles for investing success publication (PDF), things that investors can have much control over include:
- Their investment management fees. High fees handicap returns; it's as simple as that.
- The tax efficiency of their portfolios. Frequent trading, for instance, can trigger CGT in addition to extra transaction costs. On the other hand, the concessionally-taxed super system can provide excellent opportunities for greater tax efficiency.
- Their portfolio's long-term asset allocation. Successive research has concluded that a diversified portfolio's strategic asset allocation - the proportions of its total assets invested in different asset classes - is responsible for the vast majority of its return over time. Appropriate diversification spreads both risks and opportunities.
- Their own emotions. Investors who maintain a disciplined, unemotional approach to investing focus on the long-term without being swayed from their course by short-term market movements and the latest media headlines. This makes them less likely to fall into the trap trying to time the market - that is, attempting to pick the best times to buy and sell.
An investor's challenge is to look beyond the financial obstacles or rocks that will inevitably arise along the way.
By Robin Bowerman
Principal & Head of Retail, Vanguard Investments Australia
02 July 2015