The fundamentals of performance
Different funds are designed for different investors and their savings goals and as a result, they provide different outcomes. Past, or short-term performance, is no indication of future performance – last year’s (or month’s) winner is very rarely the winner twice in a row.
Therefore, while performance is very important, the first thing to get right is making sure you are in the right fund type for your savings goal and timeframe.
While short-term performance can be an interesting thing to watch closely, it’s no different to the short-term value of a house. A house’s value goes up and down every day, depending on valuations and sales of surrounding properties; the main difference – a house’s value is not on-show every day, or in real-time.
Investing is a long-term game – making decisions based on short term performance can typically result in worse outcomes down the road. As we say above – the two most important things that ASB believe is making sure you are in the right fund and having access to professional advice, so you achieve your goals.