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Investment nonsense vs investment simplicity

by | Jul 6, 2018 | Investment News

The world of investing has an incredible ability to make the simple complicated.

The motive is fees. Nothing else adequately explains it. The more complicated something can be made to appear, the more valuable it must be.

That sort of thinking is so utterly contrary to good client outcomes, it’s shameful.

Pick up any investment management literature or article and your senses will be assaulted with all sorts of ludicrous language.

Alpha, beta, delta – let’s throw some Greek about. Why not omicron and lambda while you’re at it?

Nothing has the potential to confuse like a dead, foreign language.

But investing is a really, really simple concept. Let’s talk it through.

What’s the point of investing?

To get a return that’s better than inflation. That means you will be able to buy more tomorrow than you can today.

If you don’t set out to do that you might just as well buy all you can today and keep your fingers crossed for tomorrow.

I would guess that at least 50% of the investing population do not have this as their objective. Yet it’s the only rational one there is.

How do you do give yourself the best chance of beating inflation?

Simple, buy the most valuable asset that has existed and ever will – human ingenuity.

It’s created global wealth, improved living conditions and hope for the future that was completely unimaginable 40 years ago, let alone 100 or 200 years ago.

It’s done this at a far greater pace than inflation, cash deposits or bonds.

And it will carry on doing so until the sun goes out.

And how do you tap into human ingenuity?

Simple. You buy the biggest, best and most successful companies around the world.

These are the companies that are the manifestation of all that human ingenuity – firms like Apple and Microsoft at the forefront, with the stodgy “old economy” companies of this world still cranking out investor returns.

Even simpler, all these great companies are brought together in things like the FTSE, S&P500, Nikkei, etc.,  making them super easy to buy.

And that makes it super easy for you to benefit from the effort and genius of hundreds of millions of humans around the world.

In summary, your investment strategy is to beat inflation and you do that by buying the companies around the world where your fellow humans do what they do best.

How simple is that?

future proofing your finances

advice@townclosefp.co.uk

 

 

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