How to choose investment funds
Do you fret about fund choice?
If you do you’re not alone.
After all, we all want the best, don’t we?
It’s why fund recommendations “Best Buy” lists, star fund managers and exciting new investment opportunities are so popular.
A surprising fact
But here’s something that may surprise you…
The chance of anyone – including investment professionals – picking a future top performing fund is very low.
Why? Because hardly any funds beat the average long term.
And there’s no reliable way to pick those that do.
It’s an investment truth we see all the time:
Past performance is not a guide to future performance
But how many of us take any notice?
The good news
Successful long term investors stick to a few guiding principles:
- Put your faith in long term share ownership
Companies are in business to make profit. Profit for you
- Own lots of different company shares
Different types of business, size, location and so on. Spread your money around to reduce risk without sacrificing profit
- Ignore short term ups and downs of the stock market
The stock market reacts to news – good and bad, sometimes dramatically. If you’re investing for the long term it shouldn’t bother you. If it does, you’re probably taking too much risk
- Consider investing in bonds
It helps smooth the ups and downs of investing in shares
- Pay attention to costs
Funds with lower costs, including those that hold rather than trade shares tend to do better long term
A place to start
If you’re looking for a place to start, Vanguard LifeStrategy funds tick all the boxes. Go here for details