Too many struggle with achieving wealth management successes.

My View:

Delving into best practices that have worked overcomes dilemmas.


Mindset, broad diversity and cutting losses are three best practices.

 “Success is often just an idea away.”
—Frank Tyger (1929–2011) cartoonist, columnist, humourist

Many investors wrestle with the perception that wealth management success is difficult. Then there are others who view it differently. Success echoes the sage message from Mr. Tyger. It’s not always simple to achieve, yet investors can make it an easier road to travel.

I summarise portfolio success into three disciplines: “Managing wealth is a long-term mindset. Invest in quality within a well diversified asset mix. Try to avoid large losses.”

These are the core principles captured in a few words. Simple, straightforward and short to the point. I’ve selected a sensible foundation that has the best chances of delivering over time. My best three practices firmly embrace the long-standing cornerstone of success. Something all investors ought to mull over carefully.

Let’s dig deeper into three best practices:

1. Wealth management mindset
There is a right way and a wrong way to invest. The right way allows time to work for each investor. I believe in considering risks first, returns later. The goal for each investor is to be comfortable, as well as to seek a good return. That approach builds prudent portfolios.

My preference is not to sweat the daily dose of minutia. Instead, get in the habit of asking where you envision your portfolio to be positioned in five to ten years, preferably more. Never in two to twelve months. Managing the finances is definitely a long-term mindset, not an isolated event.

Every investor is unique and benefits from the application of individual solutions. Investing is about setting a course of action to achieve a personal rate of return that reaches those aspirations.

If your focus is the near term, say less than two years, you will encounter many unpredictable events that can dramatically affect portfolio outcomes. Even with the best professional advice.

2. Extensive diversification
I don’t know where the stock markets are headed. I don’t know which sectors are going to be sizzling hot. I don’t know which investments are going to hit home runs or, heaven forbid, those that strikeout. More important, I am not concerned that I don’t know. You shouldn’t be concerned either. Nobody else knows, so we’re all navigating the same choppy waters.

My experience shows that extensive diversification works very well most times. It has served me for a long stretch and I expect that the timeless process will continue to deliver. I design serious money portfolios with quality investments. Broadly diversified among geographies, sectors and asset classes. All within a mix of equities, fixed income and cash instruments that each investor is comfortable with.

You can say that’s boring and you would be completely right. I prefer boring when it applies to serious portfolios, especially those for retirement. I suggest that excitement be shifted to other parts of your life. I’ll stick with dull and boring, well-diversified portfolios. That way I expect to be right more often than wrong.

You heard me correctly. Yes, I’ll be wrong some of the time. That is acceptable. It’s a normal part of the ongoing investing experiences, even for professionals. I accept that premise. You should too in your investing. Extensive diversification adds portfolio value most often.

3. Cut your losses
This is by far the hardest of three practices to grapple with. Simply said, try your best not to incur a large loss. Small ones are far better. Still, coming to grips with a loss is a very painful exercise for the majority.

Admitting that you were wrong about the investment analysis is not an easy statement to make. Then it’s important to quickly do something concrete about it. Don’t allow your losses to hang around and fester more bad feelings. These disruptions take your eyes off the ball.

I illustrate the financial pain of incurring investment losses:

If you lose this much You need this much gain to break even
10% 11%
20% 25%
30% 43%
40% 67%
50% 100%
60% 150%
70% 233%
80% 400%
90% 900%
100% It’s broken!


The reasons for your loss are not important. I suggest to never confuse the original price you paid with what ought to be done now with your sour investment. Say the value of your investment gets clipped by one-third. You need a 50% price upside just to get back to break-even territory. That is a tall order for any plan of action.

Be totally dispassionate when dealing with your investments. No emotional attachments please. Remember that none of the investments feel any empathy for you. When a loss happens, take the awful medicine early and swiftly. Every loss always starts out very small

I ask you to adopt and practice these four strategies from the “Don’t” school of investing hard knocks. Don’t be obsessed, don’t be stubborn, don’t take it personally and don’t sit idly by hoping to be right about your losing picks

Instead, do the right thing. Stop the financial bleeding and move to other pastures. Suppress all notions for second guesses and checking rear view mirrors. You will be right on loss remedies most times.

These three best practices assist in adding more consistent discipline to your investing. Core moves that develop sound, strong foundations for the long and winding road ahead.

Resolve to make the road to investing success easier to travel. I’ve highlighted three savvy practices that help smooth over the bumpy path

Stay disciplined. Be brutally honest on your self-assessment. Master all three best practices for happier and more prosperous investing!

About Adrian Mastracci, Discretionary Portfolio Manager, B.E.E., MBA  My expertise in the investment and financial advisory profession began in 1972. I graduated with the Bachelor of Electrical Engineering from General Motors Institute in 1971. I then attended the University of British Columbia, graduating with the MBA in 1972. I have attained the “Discretionary Portfolio Manager” professional designation. I am committed to offering clients the highest standard of personal service by providing prompt, courteous and professional attention. My advice is objective, unbiased and without conflicts of interest. I’m part of a team that delivers comprehensive services and best value in managing client wealth.