Monet and long term investing

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    Monet and long term investing
    Monet and long term investing
    04 May 2021

    Key highlights

    • Like Monet’s water lily paintings blossoming in value over the decades, long-term investing can also pay off handsomely
    • Long-term investing requires constant adjusting and diversifying of one’s portfolio
    • It is important to stick to the plan in long-term investing by resisting emotional biases and herd behaviour to stay the course

    Claude Monet’s water lily paintings pull you in. The misty, vibrant colours beguile in their shades of white, blue and green, each petal a brush stroke of perfection.

    The father of French impressionism spent the final 30 years of his life painting thousands of water lilies in about 250 of such paintings.

    He perfected his craft right up till his death in 1926 at the age of 86. Yet Monet’s pieces were not fully appreciated during his lifetime. Even 20 years after his passing, many of his pieces sat forlorn in his studio in the picturesque French village Giverny.

    Today, his water lily paintings are revered and displayed in the world’s most famous museums such as the Metropolitan Museum of Art in New York City. In May 2018, auction house Christie’s sold his Water Lilies in Bloom for US$84.6 million.

    For the long haul

    Just like how Monet’s water lily paintings blossomed in value over the decades, long-term investing can also pay off handsomely.

    With life expectancies worldwide increasing, it is all the more important to start investing early to ensure there is enough for a longer retirement season. Also, never underestimate the value of the compounding or snowball effect.

    Holding back your investment plans means potentially losing out on compounding interest – find out exactly how much here. To top it off, reinvest your dividends so that your funds work even harder for you.

    Monet’s work started way before brush hit canvas. His paintings were of his lily garden, which meant he first had to sow the seeds, carefully tend to the plants and wait for them to bloom.

    Monet’s labour of love serves as an apt metaphor for the importance of preparation and research in long-term investing. For some, it would mean ploughing through thousands of pages of financial reports which may not be their preferred way of spending precious leisure time. That’s probably why some investors prefer to rely on professional fund managers, such as UOB Asset Management (UOBAM) to do the hard work of filtering and making the decisions to buy or sell.

     

    Making each stroke better than the last

    To Monet, his water lily paintings were always a work in progress. Ever the perfectionist, he strove for excellence even when beset with cataracts during the last years of his life.

    He was known to have destroyed about 200 paintings he was unhappy with, rather than display or sell them.

    Over the years, Monet homed in closer on the lilies to paint them, extracting every fine detail. He sharpened his skills to include the treatment of water and its reflections of light in his paintings.

    Long-term investing does not mean just stashing your money away and expecting to pick up a healthy return 30 years later. There is a constant need to tweak and diversify one’s portfolio – not reactively based on the vagaries of the market, but according to one’s changing life needs such as buying a house.

    At UOBAM, we employ a glide-path solution, which means the portfolio risk is gradually adjusted after considering your investment horizon. This systematically switches your assets with higher risk to more conservative ones towards the end of your target investment horizon.

     

    Staying the course

    Monet’s paintings may be widely admired now, but they were treated with disdain in their early years. Critics panned his Impressionist paintings, calling them messy and sneered at his colour palette.

    Though initially discouraged, Monet eventually pressed on with the water lily series, changing the trajectory of art history in the process.

    It is important to stick to the plan in long-term investing. This means resisting emotional biases and herd behaviour to stay the course. Markets are volatile — see through the noise and don’t let it derail a long-term plan.

    Many successful investors have also taken a contrarian stance, believing it is often darkest before the dawn. A long-term investment horizon allows investors to harvest risk premiums, but short-term price fluctuations have to be accepted in the meantime.

    At UOBAM, we customise portfolios based on investment goals, risk tolerance levels and investment horizon.

    Paint a better financial future with us.

     

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