The start of the year often brings with it a sense of reset — new routines, new goals, and for many investors, renewed questions about what the year ahead might hold. After a few weeks of rest and reflection, we’re all back at our desks, looking forward to 2026 with a mixture of hope, uncertainty, and realism. And let’s be honest – what a crazy start to a year it has been worldwide!
At the start of each year, investors naturally ask:
“Where will returns come from this year?”
It’s an understandable question — but perhaps not the most important one.
A Simple Experiment With a Powerful Lesson
At a recent investment conference, a group of 61 finance professionals took part in a simple experiment. They were asked to maximise their earnings by betting on a coin flip. The twist? The coin was not fair — it was skewed, with a 60% probability of landing on heads.
In other words, the odds were in their favour.
Participants were given a starting amount and allowed to choose how they bet:
- Some bet small and consistently
- Some bet fixed (absolute) amounts
- Some doubled down
- Some even bet their entire bankroll on a single toss
Despite having favourable odds, the results were all over the place. Betting behaviour was erratic, emotional, and in some cases catastrophic. A number of participants went bust — not because the odds were bad, but because their strategy was fragile.
Strategy, Not Outcomes
The most interesting result was this:
Those who bet a percentage of their remaining capital never went bust. Even when they hit a run of bad luck, they survived long enough for the probabilities to work in their favour over time.
Those who used absolute betting, or took oversized bets, had a very real chance of losing everything — even though the odds were still tilted in their favour.
The takeaway was simple, but profound:
Strategy matters more than any single outcome.
The Investment Parallel
Investing works in much the same way.
Markets, like coin tosses, are influenced by probabilities — but also by randomness. Even when the long-term odds are positive, short-term outcomes can be unpredictable. Periods of bad luck are unavoidable.
This is where the distinction between chasing returns and building resilience becomes critical.
Resilience, in an investment context, is the ability to absorb shocks, recover from setbacks, and stay invested long enough for compounding to do its work.
A portfolio built purely to maximise returns in good times can look impressive — until conditions change.
Longevity Over Return
A second example below illustrates why we need a broader thinking than solely focusing on returns.
- The below graph shows the difference in returns between a fund achieving returns of 6%, 8%,10% and 12%.
- The takeaway is that more important than achieving the higher returns, is remaining invested for long enough to benefit from them
- You needed 30 years to maximise the benefit. At periods < 10 years, the benefit of a higher return did not have enough time to make a significant difference/impact. Even at 10-15 year periods, the difference in fund returns wasn’t significant. It was only for periods longer than 15 years where return significantly mattered.
A Final Thought
The lessons from the experiment and the variable returns graph are:
- risk should be managed thoughtfully, as strategy matters more than simply returns, even when returns are stacked in your favour;
- more important than fund returns, is investor behaviour- remaining invested long enough to significantly benefit from returns;
February Admin:
Below is a helpful link to an article by Ninety One around the advantages of investing in an RA and TFSA. We are big proponents of these vehicles.
With 28 February being the end of the 2026 tax year, any top ups into our RA’s and TFSA’s will need to be done before then, but many of the investment houses impose their own deadlines to ensure that all contributions are received and processed in time. As such, we would recommend ensuring that all top up requests are done by Monday 23rd February.
In 2026, our commitment remains the same:
We know that making the best decision toward you and your family’s financial wellbeing, for this generation and the next, is increasingly difficult in a world of infinite choices, changing rules and emotive news flow. We come alongside you to guide you through these choices, discern what is important and ultimately act on those choices to create a secure financial future.
We look forward to connecting soon.
Warm regards,
Wes, Dave, Jono and the GDA Team