April 18, 2024

Secrets of investing

The secret I am talking about might be a little surprising!

Back in November 2021 I wrote about 7 secrets to investing. The list comprised of behavioral secrets such as…. How best to ignore all the noise in the news and how to focus on time in the market rather than timing the market. All these points still ring true today and, in all honesty, there are many secrets to investing. Here I talk about what I believe is the best way to invest.

Our conventional investment philosophy is, and always will be, to use a range of passive funds. We believe passive investing outperforms active investing over the medium to long term.

By passive investing we mean a buy-and-hold portfolio strategy with a long-term investment horizon, minimal trading and tracking a variety of index’s rather than stock picking. Active fund managers do not tend to repeat their performance year to year, and the very few who do tend to capture their additional returns by charging higher fees rather than passing the performance to investors.

There are thousands of passive funds available to choose from, all tracking different indices, however these will use a variety of different methods to track an index leading to different investment outcomes and returns. In short two passive funds tracking the same index can have vastly different results. A fund with minimal tracking error is important.

We use a variety of different funds each tracking a specific index to ensure diversification, alignment to a client’s risk profile and to capture global returns. An example would be a FTSE All Share Tracker, this tracks the share price of over 600 UK based companies.

By sticking to our Investment Principles, adding in the Financial Planning (for example using tax allowances) and behavioural coaching this all adds to a powerful strategy and all form parts of the secrets of investing. But the secret I am talking about today and that nobody ever mentions is…. the client.

2022 and leading into 2023 was a challenging period for investors. All my clients-maintained consistency, listened to the facts and kept invested. As a result of working in partnership with my clients, they have been rewarded with recent investment returns. As a Financial Planner “I can only take the horse to water….”.

I do not wish to jinx the stock market and we will see further volatility but the returns we have seen over the last 6-12 months have been very good and I feel it is important to share this positive news.

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Please give us a call on 07590 835523 or email us at info@midwinterfinancialplanning.co.uk
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