As soon as people I meet find out I’m a financial adviser, often I am asked how I think the markets are going or how a particular stock may be a good buy or overheated.
My response is […..]
Your investment predictions are not profound
I'm an active investor
I have posted here many times about the benefits of index investing over active investing, yet I still invest some of my money in active investments. It’s only about 15% of my total portfolio.
I know the odds are against me because after the high costs of active investing, active investments only beat passive investments one third of the time. But I want a chance to be one of the outperformers.
I am telling you this as I hate when I see passive indexers attacking active investors for their strategy. In the forums I visit, they are dominated by proponents of low cost, passively managed index funds. And for good reason. They perform better most of the time.
This is why I have 85% of my portfolio in index funds. Well diversified, low cost, and better odds of better returns. But I still have an itch I want to scratch. You may say there’s a cream for that.
But the itch I am referring to is one where I select a basket of companies that I think will outperform the index. Because it is only 15% of my portfolio I am not too perturbed if they lose 50% or more in value. Because I know that is the price I have to pay for less diversification. But I am willing to take the chance for better returns for this small portion of my portfolio.
I would never have 100% of my portfolio in active management. The numbers and odds don’t stack up. But I am more than happy to have a little play on the side.
Some people are fine with 100% in index investments. Personally, I need something a bit different.
Some people are fine with 100% in active investments. Personally, I am far too risk averse for that.
Others are somewhere in between the two.
The point is there are all kinds of investors out there, with different reasons for investing, different tolerances for risk, and different end goals. So be nice with other and don’t be so judgmental. You know what works for you. Don’t be so quick to knock something that works for someone else.
As long as everyone knows the potential risks of their strategy and have coping strategies in place, then all credit to you. You do you. Scratch your itch.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here
Save more or chase investment returns
Sometimes I feel like a broken record, but people do and say things like a broken record that make me feel like I need to keep pushing the point. In this instance I am talking about seeking the best investment returns.
Too many people are spending untold hours trying to select the ‘perfect’ funds. Looking for the next big thing or trend so they can achieve great returns. Yet, the same person will often be wasting a lot of money unnecessarily on their budget. If some people spent as much time on their spending as they do […..]
Risk: Do you want to eat well or sleep well?
Top 5 stock picks for 2021
Q + A with InvestNow
Up until recently, we have been a bit limited to where we can invest our KiwiSaver money, especially if you believe in low cost index funds as I do. Simplicity and Superlife are the two main ones for most seeking low cost, passive investments. Simplicity tends to be lowest cost, albeit with a limited range of funds. Superlife slightly higher cost, but a far greater selection of funds to choose from.
Recently, InvestNow joined the KiwiSaver fray offering even more competition for low cost KiwiSaver investments, in much the same manner as […..]
How can my investment lose money? Let me count the ways
Just do it: Perfect is overrated anyway
There are many things in life that we want to try but we are afraid to. We will make all kinds of excuses as to why it can’t be done. Or we analyse and analyse until we can’t analyse no more and we have experienced information overload or analysis by analysis.
This is a situation I see from many new investors. They know that […..]
Doing nothing is quite the investment skill
Why Sharesies is no good for beginners: Part two
Some time ago, I wrote an article about why the fee structure is not suitable for Sharesies customers.
It is very clear from the numbers that Sharesies has a lot of beginner investors. They have about $500 million under management and 166,000 […..]
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Why are stocks not going down?
Short term investment losses are normal
Buy and hold investing for the win
Investing is only gambling if you are doing it wrong
There are a group of people that believe investing in the share market is gambling. This opinion is formed by the fact that companies go bust and markets can drop by 30, 40, 50% or more in any given year. This is all true. It happens.
But good news happens far more frequently than bad news when it comes to the share market, as is evidenced by […..]
