Don’t listen to the wolves on Wall Street…

BLOG23rd Jun 2014

Are you after an investment strategy that’s smart, simple to understand and gives you every opportunity of outperforming the average fund manager over the long-term? If yes, then passive investing is probably for you…

First things first though, what is passive investing? With passive investing, you don’t need to worry about the price of commodities such as gold. Nor do you need to immerse yourself in company reports trying to evaluate various shares either in the UK or globally. Passive investing means you don’t need to speculate to accumulate! There’s no need to time the market i.e. sell high and buy low, no need to try and pick winning companies, or convince yourself that you have the required sixth sense to beat other investors – especially since the vast majority of highly educated investment managers and their large teams can’t reliably outperform either. As a passive investor, you stop listening to all the noise from the wolves on Wall Street and you refuse to participate in The City’s game. Instead, you invest in low-cost funds which either capture the return of global capital markets or track a commercial index such as the FTSE All-Share.

But why passive investing? There’s years of evidence including Nobel Prize winning papers which demonstrate that passive investing is a superior strategy compared to following the latest hotshot fund manager or investment scheme which is based on, and dependent upon, speculation. Passive investing can save you from costly mistakes, it’s as straight forward as investing gets and it’s sensible – you only need half a dozen funds in your portfolio to spread your money across the key asset classes and your investments will still be far more diversified that than the average investor.

Too good to be true? Sure, passive investing is a medium to long-term pursuit and like all investors, you must be prepared to cope with volatility and the market downturns that will occur from time to time. However, passive investing isn’t some bizarre offshore saving or tax avoidance scheme.

Passive investing simply requires you to have faith in capital markets as the evidence shows that as investors we are owed a return for the capital we supply – history demonstrates this to be the case.

Passive investing offers all this and it’s a wise strategy that gives you clarity and peace of mind, frees up valuable time, and both enhances and preserves your wealth.

For more information contact Jonathan Gibson, Director of Wealth Services, or call 01224 625111.