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| Lanre Ogunlesi, Fashion & Investment Expert with wife Folu |
As you’ve
probably guessed from Rule 49, most of those who pick their own stocks like to
think that they can see value where others can’t. Of course, we don’t like to
look too often to see if our track record backs that up, and I’m sure many a
Rules Player has made dumb investment decisions. If you don’t trust yourself to
make clever decisions every time, or perhaps simply want to save the occasional
investment decision for yourself and let someone who knows more than you do
take care of the rest, then it’s OK to use the professionals.
probably guessed from Rule 49, most of those who pick their own stocks like to
think that they can see value where others can’t. Of course, we don’t like to
look too often to see if our track record backs that up, and I’m sure many a
Rules Player has made dumb investment decisions. If you don’t trust yourself to
make clever decisions every time, or perhaps simply want to save the occasional
investment decision for yourself and let someone who knows more than you do
take care of the rest, then it’s OK to use the professionals.
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When it comes to
investment, the professionals cluster wherever you can find tall buildings and
long lunches. Wall Street, Singapore, the City of London … they’re all positively teeming with investment
experts ready to put their big brains and even bigger computers to work on your
behalf; all for just a teensy- weensy fee of course.
investment, the professionals cluster wherever you can find tall buildings and
long lunches. Wall Street, Singapore, the City of London … they’re all positively teeming with investment
experts ready to put their big brains and even bigger computers to work on your
behalf; all for just a teensy- weensy fee of course.
Well gold, as
they say, may be bought too dear. I’ve often wondered just whose interests our
chums in the square mile are serving. I certainly know a friend who’s studied
them and written about them, and who swears blind that there are crooks in the
Stock Exchange, and that at least Dick
Turpin ‘had the decency to wear a mask and not a pin-striped suit’. Forgive
me if you are a stockbroker – my friend may be just a touch paranoid – but
personally I believe that if you’re going to use the pinstripes to manage some
of your stock-market investments, make sure you use them wisely. That’s a big
if, and that’s what this rule’s all about-How to use them to make more
money, not take your money.
they say, may be bought too dear. I’ve often wondered just whose interests our
chums in the square mile are serving. I certainly know a friend who’s studied
them and written about them, and who swears blind that there are crooks in the
Stock Exchange, and that at least Dick
Turpin ‘had the decency to wear a mask and not a pin-striped suit’. Forgive
me if you are a stockbroker – my friend may be just a touch paranoid – but
personally I believe that if you’re going to use the pinstripes to manage some
of your stock-market investments, make sure you use them wisely. That’s a big
if, and that’s what this rule’s all about-How to use them to make more
money, not take your money.
“I certainly know a friend who’s studied them and
written about them, and who swears blind that there are crooks in the Stock
Exchange, and that at least Dick Turpin
‘had the decency to wear a mask and not a pin-striped suit’. Forgive me if you
are a stockbroker – my friend may be just a touch paranoid – but personally I
believe that if you’re going to use the pinstripes to manage some of your
stock-market investments, make sure you use them wisely”
Now, pay
attention to this bit – it’s really, really important. First they will tell you
that they can take your money, invest it actively and beat the market.
That they do beat the market and that they will beat the market. They
may even have some colorful charts to show you how they beat the market, every
year. Apart from last year of course (and that was just a blip, a
short-term correction you know, everybody took a bath on that one, but next year…).
Just sign here, sit back and you’ll soon be worth more than Warren Buffett on a hot streak.
attention to this bit – it’s really, really important. First they will tell you
that they can take your money, invest it actively and beat the market.
That they do beat the market and that they will beat the market. They
may even have some colorful charts to show you how they beat the market, every
year. Apart from last year of course (and that was just a blip, a
short-term correction you know, everybody took a bath on that one, but next year…).
Just sign here, sit back and you’ll soon be worth more than Warren Buffett on a hot streak.
Sounds too good
to be true? Yep, it’s wishful thinking and flawed logic in equal measures.
to be true? Yep, it’s wishful thinking and flawed logic in equal measures.
To put it
simply, for somebody to be doing better than average, somebody else must be
doing worse, and since the big firms invest most of the money in the market,
who are they beating? Themselves? Right! and here’s the ugly little truth about
the investment industry. In any given year, some will come out ahead and some
will lose, but over the long term the market beats most of them, most of the
time. Oh I’m sure many of them try hard, they really do, but in the end nearly
all of them fail to grow money any faster than the market. So, don’t pay them
for trying.
simply, for somebody to be doing better than average, somebody else must be
doing worse, and since the big firms invest most of the money in the market,
who are they beating? Themselves? Right! and here’s the ugly little truth about
the investment industry. In any given year, some will come out ahead and some
will lose, but over the long term the market beats most of them, most of the
time. Oh I’m sure many of them try hard, they really do, but in the end nearly
all of them fail to grow money any faster than the market. So, don’t pay them
for trying.
A sure-fire
scheme for predicting winners? Unlikely. A hot tip for technology stocks? Hot
air. Ask yourself this. If, like most people, you read the brochure, listen to
the adviser (who’s on a commission) and buy into a fund aiming to beat the
market, what’s the one thing that you can be sure will be higher than
average? The returns? Or the fees? You know the answer to that one, don’t you?
If you want help to put your money in the markets, without putting much of it
in someone else’s pockets, keep it simple.
scheme for predicting winners? Unlikely. A hot tip for technology stocks? Hot
air. Ask yourself this. If, like most people, you read the brochure, listen to
the adviser (who’s on a commission) and buy into a fund aiming to beat the
market, what’s the one thing that you can be sure will be higher than
average? The returns? Or the fees? You know the answer to that one, don’t you?
If you want help to put your money in the markets, without putting much of it
in someone else’s pockets, keep it simple.
If you don’t
have the time or know-how to carefully research the best active fund then
follow the rule that less is more (and usually comes cheaper).
Put your trust in funds that don’t charge you big fees for taking big risks
with a succession of clever strategies to beat the house. Pick ones managed by
people who know enough to know that, in the long run, they won’t beat the house
by chasing higher returns from one stock to the next. Pick ones managed by
people who’ll invest your money, with minimum fuss and minimum fees, in a good
range of stocks that replicate the market and then go to lunch. Then you can
sleep at night (or get back to reading this book) safe in the knowledge that
your money is in the market, quietly working away on your behalf.
have the time or know-how to carefully research the best active fund then
follow the rule that less is more (and usually comes cheaper).
Put your trust in funds that don’t charge you big fees for taking big risks
with a succession of clever strategies to beat the house. Pick ones managed by
people who know enough to know that, in the long run, they won’t beat the house
by chasing higher returns from one stock to the next. Pick ones managed by
people who’ll invest your money, with minimum fuss and minimum fees, in a good
range of stocks that replicate the market and then go to lunch. Then you can
sleep at night (or get back to reading this book) safe in the knowledge that
your money is in the market, quietly working away on your behalf.
If you’re wondering where to find these funds,
they’ll be called index funds or tracker funds. Of course, they pay less
commission to middlemen and spend less money on advertising, and so their
brochure may be the last one out of your financial adviser’s briefcase, but
when it comes to using investment professionals, start by putting your trust in
time, not clever tactics. You can take a more active approach as your
experience grows, but believe me, the fees will be smaller.
they’ll be called index funds or tracker funds. Of course, they pay less
commission to middlemen and spend less money on advertising, and so their
brochure may be the last one out of your financial adviser’s briefcase, but
when it comes to using investment professionals, start by putting your trust in
time, not clever tactics. You can take a more active approach as your
experience grows, but believe me, the fees will be smaller.
From The Book; The Rules of Wealth by
Richard Templar
Richard Templar
(Read Rule
52 of Rule of Wealth tomorrow on Asabeafrika)
52 of Rule of Wealth tomorrow on Asabeafrika)
Read-to-Wealth Series
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