Three Key Attributes that Make an Investor Successful

December 16, 2019

The following was written by Curt Knorr, an Investment Management Senior Partner located in Blue Trust’s national office in Atlanta, Georgia.

Since I joined Blue Trust in 1986, the company has gone through many changes for the better. We had a staff of 25 then – it’s over 350 today. We didn’t formally manage investment portfolios in 1986, but today we are approaching $10 billion in assets under management. We’ve expanded our national footprint to 14 branches to better serve our clients.

Serving on the investment team, I’ve managed everything from our largest institutional accounts to portfolios for young families who are just beginning their stewardship journey. Regardless of the number of decimal places in their investment portfolios, I’ve observed that successful investors:

1. Hold their resources with an open hand. The markets have experienced three major drawdowns over the last 30 years; the largest was in 2008-2009 when stock indexes dropped nearly 50%. Despite all the uncertainties at the time, many of our clients put their trust in God who gave them the peace and tranquility to navigate through the very rough waters. With the perspective that their wealth was a gift from God and they were appointed as stewards, they realized that there was no way to foresee what was happening in the markets nor could they know what the future held. Most of them saw God restore their wealth in a relatively short period of time.
2. Maintain a long-term perspective. There’s a pervasive temptation today to check account balances frequently. When the market has a particularly good (or bad) day, it’s unfortunate to see how investment accounts perform after clients decide to make quick, short-term portfolio changes; it rarely leads to a good outcome. If an investment account is earmarked for goals more than 10 years in the future, like retirement or college, we have learned that the best course of action is usually no action. Markets cycle up and down on a daily basis for a myriad of reasons but very few have lasting impacts, and it’s important to let the market do its job toward creating long-term returns. Albert Einstein said, “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”

3. Align their portfolio with their investment goals. Most people are putting aside money for retirement through IRAs or 401k plans. They also may have intermediate-term objectives like education funding or starting a business. Some savings have short-term objectives (e.g., emergency fund, buy a car, next year’s big vacation). These buckets of money have very different time horizons and, as a result, should have very different investment allocations. For example, if retirement is still a long way away, investing in stocks is the usual approach we recommend, and if the money is needed sooner, bonds and cash are more appropriate.

My wife Nancy and I have applied these principles consistently throughout our lives. For us, they have worked incredibly well, allowing us to spend as much time as we want seeing our grandkids, traveling, and working with our favorite ministries. These things are my personal definitions of success; however, each investor’s definition of success is different. Talking with your advisor about your personal objectives and how to best create positive cash flow in each ‘savings bucket’ will help you form a solid plan for stewarding the resources that God has given you.

Throughout my years serving clients, I’ve come to realize that having a long-term perspective, spending less than you bring in each year, having a steward’s heart towards wealth, and utilizing a strategy that you’re able to stick with can mean the difference between being anxious and being confident around your finances.

At Blue Trust, we believe that investment success is accomplishing your individual financial goals. If you would like to learn more about how we can help, please contact your Blue Trust advisor, call 800.987.2987, or email blog@bluetrust.com.

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