If you’re anything like most people you are entirely frustrated with the interest rate that you receive at the bank. In most cases, the interest you receive on your account is less than inflation, meaning that you are losing money in your savings account! Worse, when you try to get advice from the bank they don’t really seem to listen and just want to try and force you into some high fee paying fund or scheme which has less than satisfactory returns. Good for the bank, bad for you.
These people don’t have your interests at heart so how to do you combat that?
Through knowledge.
Knowledge of how to invest and where to invest.
This is something I discovered myself. While I have worked in banking and finance for 20 years I discovered this knowledge through years of study and application. I had to draw the correct conclusions from my experience of managing investments for banks. And you’d be surprised how many bankers can invest the bank’s money perfectly well but when it comes to their own investments they are a disaster. This is because many of them are focused on the specific investments that they manage and they do not see the big picture. My years of independent study which culminated with me being the awarded the prestigious CFA Charter gave me the knowledge of how and where to invest but also taught me what is in my opinion the key principal when it comes to getting better returns than at the bank but at a reasonable level of risk: the principle of diversification.
In other words, spread your investments around and don’t put all of your eggs in one basket. So while you could certainly get a better return by investing in say the stock of Nvidia Corporation (which returned 84% from January to December 2017!) investing in one stock is a high risk strategy and really only for the experts. If you get it wrong you could certainly lose your entire investment. Another, much more conservative strategy would be to invest in an index fund (that invests in all of the stocks in the S&P 500 for example). The average return on the S&P 500 since inception (1923) is around 10%. Not as high as Nvidia but who knows whether they will be around next year? Anything could happen. But certainly it’s a huge improvement on the negative rates from the bank.
So here you have the first tip for how you can improve on the rates from the bank:
- Gain knowledge of the fundamental principles behind investment
- Don’t put all your eggs in one basket – invest in a diversified portfolio.
You may be thinking that this seems like a lot of work and that you don’t want to spend years figuring this all out. But you don’t have to. That’s what I’m here for. To begin benefitting from these principles is a relatively quick process and I will guide you through it. So look out for my next email in which I will delve deeper into these concepts and explain how they you can apply them.
However, if you don’t want to wait for my next post, get in touch with me and we can have a quick chat about it. You can reach me here:
Otherwise, I’ll see you soon.
Best,
Robert.
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