# What to invest in



## Vinny (2 Jul 2003)

Hi, I must admit I've only found this site a few days ago, but am overwhelmed by the amount of good reading material and advice. I'll certainly be doing my best to spread the word and well done to all involved so far.

One thing I was happy to find was discussions on "Rich Dad/Poor Dad" and the authors' advice in some of his books. Anyone familiar with this guy will know how he recommends buying assests as being the way to reach "financial freedom". And his definition of an assest is something which puts money in your pocket. Finding "assests" is not proving too easy though. Lately though I've been trying to assess property in the likes of Budapest, Canaries etc. as possible assests. But I notice that everytime someone has posted a question about these type of investments, there are a multitude of contributors who suggest they may not be good investments. Now I'm not critisising this, don't get me wrong. I'm open to anyones opinion. The point I want to make is this; what do some of you invest in and think it wise to do so when you're not keen on foreign property, equities, forestry etc.? I ask this simply to help open my mind to other possibilities I may have not considered. One last thing, when I first invested in property 8 years ago, my friends and family all thought I was mad, overstretching, not weighting the risks, etc. No one backed my decision at the time. 
I better stop writing now but will look forward to contributing further in the future.


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## ClubMan (2 Jul 2003)

*But I notice that everytime someone has posted a question about these type of investments, there are a multitude of contributors who suggest they may not be good investments.*

There's a large element of devil's advocacy in such comment. Many people post about hearing about then next "best" foreign investment location and are very positive and gung ho so some people naturally point out some of the pitfalls in an attempt to alert them to some of the dangers and to encourage them to think for themselves (not be guided by others, particularly those with a vested interest in selling to them!) and assess such a strategy objectively to see that it is financially viable and also fits their own particular investment needs.

On a more general point - there is rarely any such thing as a "best" investment in all cases (well, the SSIA might be an exception!) as all investment strategies involve trade-offs and different risk/reward profiles and suitability can only be judged in the context of the specific financial circumstances, investment goals etc. of a specific individual.

I'm generally in agreement with most of what the AAM Giude to Savings & Investments says although I don't think I'm generally as bullish as _Brendan_. Once you have eliminated any significant/costly debts (the exception being to at least reduce the mortgage to a comfortable level - which means different things to different people) then it makes sense to build a balanced portfolio of mixed and diversified investments. There is no silver bullet, no killer investment!

By the way - if you're honest would you say that you were mainly lucky in your property investment success or did you have a grand plan that worked? Just curious!


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## Vinny (2 Jul 2003)

*Re: Best investments*

Hi Clubman,
                 to answer your question, I had a master plan to get enough rent to cover the mortgage when I first bought property for investment, which I did, barely! However, I gladly admit that the subsequent capital appreciation was pure luck as far as I'm concerned as I had never envisioned that in the beginning. I certainly don't intend to give the impression that I was the only one with foresight back then, I was lucky also for sure. The point I'm trying to get across is that there are always "doubting Tomas'" for want of a better phrase who will knock investments which have possible high returns. This was something I noticed is often mentioned in "Rich Dad/Poor Dad" also. Of course investments are often hyped up, but surely some are not "too good to be true". What I'm looking for today, is a situation where I can buy property which will self-finance, and if it appreciates significantly, then that's a bonus. From that point of view I'm investigating some foreign locations.
 I fully understand that alot of contributors are playing devils advocate, and I'm all for that as I said. I simply want their views on what investments they would go for instead if they believe the investment in question is not all it's hyped up to be.


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## ClubMan (2 Jul 2003)

*Re: Best investments*

Thanks. I was by no means insinuating hubris on your part for your successful property investments but was just curious about what your original strategy was. I understand your viewpoint, particularly on the property investment/rich dad-poor dad strategies but, personally, I'm not sure that investing only or mainly in any one asset class or geographic location (arguably both simultaneously in the rich dad-poor dad scenario) is the most prudent of investment strategies or suitable in most cases. As you can testify such a strategy is high risk but can reap high returns as in your case but that is not necessarily right for everybody. As I've said it's largely pointless any or all of us explaining our favourite asset classes or strategies since these are (hopefully) simply the right decisions for us. What's right or suitable for others depends on their own financial circumstances, investment goals etc. Unfortunately there are few easy general answers when it comes to personal finance and investments.


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## rainyday (2 Jul 2003)

> what do some of you invest in and think it wise to do so when you're not keen on foreign property, equities, forestry etc.?



For the past 5-ish years, I've focussed on;

a) overpaying the mortgage to get it down to a more comfortable level
b) maxing SSIA contributions for self & wife (both equity-based)
c) investing in employee share purchase schemes in my current & last employer, taking benefit from tax breaks/discounts allowed.
d) participating in company pension scheme to get maximum employer contribution

My core equity investments are still 'in the black'. My pension funds and one of the two SSIA's are in the red as a result of the poor market performance over recent years.


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## Vinny (2 Jul 2003)

*Re*

Hi Clubman,
                as I understand it, you would encourage diversification in investment, right? I have always believed this was the right policy also, but lately I do question the wisdom of that, mainly based on the Rich Dad books. He would preach that focusing is the more profitable policy. Looking back at my finances over the past 8 years or so, I can easily see how that could have worked better for me, but also how it could have lost me everything (hindsight and all that). I guess the real problem is being able to focus on the right investment type. 
 I appreciate your point about investment decisions depending on individuals and their investment goals. However, I would suggest that one common factor is that everyone invests to make a profit and create wealth for one reason or another. So from that point of view, we all have a common goal, and so could possibly share views on what to invest in. I think timescales are the main differentiating factors. 
 Suppose I'm asking is UK property a good buy for example. Instead of someone simply posting a reply that rejects the idea, if they can back up their critisim with suggestions of a better investment, then to me it gives their opinion more weight in my mind. 

Rainyday, thanks for the input. Your strategies are very similar to mine as in clearing mortgage, using SSIA's etc. The one thing I'm toying with which you omit is AVC's. I've been stung with Eircom, and Technology Funds, and even employer shares have slumped. 

I honestly think many contributers would verify that they have sound financial planning in place. But do any of these people want to be rich and do they think they will ever be with their present investments?


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## rainyday (2 Jul 2003)

*Re: Re*

Hi Vinny - Yep, I've intentionally avoided AVC's for two reasons;

- The much-touted tax 'break' on pensions/AVC's is a myth - there is a tax-deferral. So you avoid paying tax now, but you may well find yourself paying tax on the income in the future.
- The restrictions on 'what you can do' with pension fund/AVC's on retirement worry me - I really wouldn't like to be forced to buy an annuity with my retirement fund.

And actually, now that I think about it - there is a 3rd reason - NO MORE MONEY left after the other investments!


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## Tommy (2 Jul 2003)

*Re: Re*



> Suppose I'm asking is UK property a good buy for example. Instead of someone simply posting a reply that rejects the idea, if they can back up their critisim with suggestions of a better investment, then to me it gives their opinion more weight in my mind.



Is this not a little unfair to those who do volunteer to answer queries and assist people on these pages?

In evaluating any investment proposal, there is always the option of choosing not to invest at all. For example, if the question arises of borrowing 100% finance to buy a property in, say, Brazil, I can't see why it should be essential for any of us to have to be able to propose an alternative investment for that person, before we can answer their query (particularly if we ourselves believe that 100% borrowings is a dangerously risky option for most investors). If that were the case, I would expect many queries would not be answered at all. Would that be a better situation?

Also, what might be a great investment for me (based on my circumstances, financial standing and other factors) might be a rotten investment for you. And vice versa.  

With regard to your earlier post, I feel it is unreasonable or pointless to ask other contributors what they have invested in, in the past. First of all, some of us may prefer to keep confidential the details of our own personal financial decisions and circumstances.

Secondly, if someone makes a comment here, backed by evidence and reasonable logic, surely that contribution is welcome regardless of whether it comes from a tycoon with a massive portfolio or from a pauper?



> I honestly think many contributers would verify that they have sound financial planning in place. But do any of these people want to be rich and do they think they will ever be with their present investments?



I presume this wasn't meant to sound as adversarial is it reads


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## ClubMan (2 Jul 2003)

*Re: Re*

*I honestly think many contributers would verify that they have sound financial planning in place.*

Oddly enough, while I (hopefully) can give useful advice to others in relation to matters of personal finance, I am pretty bad at managing my own affairs of late. Granted I was lucky to buy my PPR c. 95 before house prices really took off and managed to clear the mortgage well before term, I have some _Post Office_ bonds/certs that are still paying relatively high rates of interest and have some other (direct and unit linked) equity based investments including my SSIA, I also have a fairly substantial sum sitting relatively idle and don't have adequate pension or life assurance cover (something at least partially attributable to my recent precarious employment situation and prospects!).

*But do any of these people want to be rich and do they think they will ever be with their present investments?*

"Rich" means different things to different people. I personally have no overriding desire to be a millionaire for example and don't strive towards that. Trite as it may sound, while a certain level of wealth certainly helps, I'd prefer to be healthy and generally happy/contented in my personal and work life than be "rich" in the financial sense.


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## Vinny (2 Jul 2003)

*Obligations when answering*

Hi Tommy,
              I'm not suggesting it be essential for alternative investments to be offered when commenting on others. What I'm trying to get across (badly obviously) is that all too often it's easy to criticise a possible investment, when maybe that reason is simply due to ones personal situation eg. if I have only 1k to invest then a house in Brazil is not very attractive compared to if I have 100K to spare. 
 As regards asking what others invest in, I do that in the assumption that they have anonymity so therefore no invasion of privacy is intended, so what harm?
 Finally, I never (intentionally at least) made any comment to the effect that anyone should be excluded from commenting or contributing in any way regardless of their financial worth or lack of.

 I sincerely hope my questions or not offensive to anyone, I'm merely trying to provoke discussion on a subject a consider my favorite hobby.


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## ClubMan (3 Jul 2003)

*Re: Obligations when answering*

_AAM_ is a great forum but a big problem with queries and the resulting reponses is that they are done with only partial knowledge of the wider personal financial circumstances. Somebody who posts that they're going to buy property in location X could be talking about one small part of their overall diversified (by asset class and geographic region) portfolio or they could mean putting their life savings or maturing pension into it. It's usually hard to know. This is part of the motivation for noting gotchas and caveats as well as advantages in strategies that are outlined. Sometimes people simply have an incomplete or incorrect understanding of how things work in which case they will usually be put right fairly quickly. To be absolutely throrough one would need to add layers and layers of additional questions and disclaimers (as I find I am doing more and more of lately) in order to get the the bottom of a single query at which point it becomes onerous for contributors and boring for readers (or they start accusing one of being pedantic or condescending :rolleyes  ).


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## Fairfield (3 Jul 2003)

*AVCs*

Rainyday - compulsion to buy annuity with AVCs now gone - these can be rolled into an ARF (provided you meet the conditions ).

Can absolutetly relate to your list of financial priorities (& like you have inadequate pension),but hitting the AVCs hard is probably the best thing we can do.


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## rainyday (3 Jul 2003)

*Re: AVCs*



> these can be rolled into an ARF (provided you meet the conditions ).



Hi Fairfield - Thanks for the update. Can you expand on the conditions?


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## Phoenix (4 Jul 2003)

*Strategy*

Hi Vinny,

My story sounds similar to yours. I've done very well out of property, by accident rather than design. I've now sold out of property and am sitting on a lump sum that badly needs a long-term home. 

I'm old enough to have been able to afford to buy a house on my own in Dublin. My current partner did the same. When we teamed up in the mid 1990s we moved into my home and rented out my partner's house. This wasn't part of some grand plan. It just happened that my house suited us both and we held on to my partner's house largely as an insurance policy in case we split up.

We finally sold my partner's house late last year. Apart from representing a big vote of confidence in our future together, we reckoned that the property market had peaked :\  so that there was no more upside left. We also wanted to minimise capital gains tax. My partner had occupied the house as a principal private residence for half the period of ownership; the longer it was rented the more the capital appreciation would be exposed to CGT. 

We've used the sale proceeds very wisely, clearing the mortgage on my house and maximising SSIA contributions. As a public servant my partner's pension will be paid by the rest of us suckers. 

My pension position is a lot more shaky. I belong to my employer's not very generous defined contribution scheme. Staff pensions definitely aren't a priority with my employer, the charges are huge (poor allocation rate, bid/offer spread _plus_ a fixed charge per contribution), and I'm worried that an AVC would be just throwing good money after bad. So for now I'm sitting on my hands while the pensions timebomb ticks away.

We also need to put our lump sum to work (it's just gathering dust and little else in a Northern Rock account). My gut says get back into property. My heart says property has had its day. I've found  _Brendan's_ book very useful but somehow I can't bring myself to spend my windfall buying shares in ten Irish plc's, putting them in the bottom drawer and forgetting about them. 

Like you, I've also been influenced by _Rich Dad, Poor Dad_, especially his comment that a "buy and hold" strategy should be renamed "buy and hold and pray that the stock market doesn't collapse again". Investment theory says not to put all of your eggs in one basket. We ignored this and it paid off.  

I also think that the personal experiences of other investors would be useful on this site. I doubt that my story will be particularly useful to anyone. But I suspect that a lot of other people with a few bob have made the money largely by accident. I think I used up all my luck during the property boom. Now I want a definite investment strategy.


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## ClubMan (4 Jul 2003)

*Re: Strategy*

*I doubt that my story will be particularly useful to anyone.*

I think it's an excellent post and certainly proves that there are no easy or necessarily "right" answers when it comes to investing but merely different choices with different trade-offs. Glad to see I'm not the only one who gets a bit stumped when trying to make their own personal finance decisions! Welcome to the inaugural meeting of investors anonymous. My name is _ClubMan_ and I find it hard to make the right investment decisions... :lol


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## Vinny (5 Jul 2003)

*Re: story being useful*

Hi Phoenix,
               thanks for the post also. It makes me wonder how many people simply were extremely fortunate rather than extremely wise during this property boom. And more so, with wisdom and hindsight how many will be able to spot and benefit from the next boom (if or when)?? Like you I've basically cashed in the success I've had in Ireland and so am looking abroad. Hence the discussion I tried to stimulate here, as I want to build on my success thus far and not loose it all. But like you, shares don't really appeal to me partly due to previous losses, and partly due to exposure already through SSIA's and company shares etc. I still believe sound property investments are available elsewhere. But it does take alot of research, something I'd hoped to find help with on AAM, and have done to an extent. As regards investments other than property, I had hoped to get some fresh ideas, but no one seems to be forthcoming. 
I previously suggested that if someone wanted to criticize a particular investment strategy, their words would, in my opinion, carry more weight if they could back it up with a suggestion for a better investment. I noticed last night while browsing through some older threads (I am new to this site) that one contributor did just that in a discussion on UK residential property by suggesting commercial property auctions instead. All I'm saying is it shows they are not simply knocking the idea for the sake of it but have a good reason for doing so ie. they know of a better investment (or at least think they do). Anyway Phoenix, hope you find a better home than NR soon for the cash!
Clubman, what night's the meeting, I want to come??


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## Phoenix (7 Jul 2003)

*Doing your homework*

Hi Vinny,

When searching for investment ideas, _Rich Dad, Poor Dad_ recommends attending seminars, especially to get a handle on the property market. I suppose investment seminars are commonplace in the States. Anyone know of investment workshops/tutorials/grinds in Dublin? You could come along too ClubMan  .


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## ClubMan (7 Jul 2003)

*Re: Doing your homework*

No thanks. I'm wary of people who write books about how to get rich and also insist that you go to their seminars. Seems odd to me that they'd go around preaching rather than practicing! :\


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## Phoenix (7 Jul 2003)

*Investing*

Hi ClubMan,

Just for the record. _Rich Dad, Poor Dad_ appears to practice what he preaches. He claims to be the $1m+ a year income bracket. Maybe he's spoofing but I've no reason to disbelieve him. He runs seminars but you don't have to go. His "message" is contained in his books. If you think it's rubbish, all you've lost is the price of a paperback. 

At least he gives you some direction and shape on investing.  He stresses the importance of doing your homework, such as attending investment seminars. They don't have to be _his_ seminars. They don't have to be fee-paying seminars. 

I need a lot of help before I'd go back into property. The Sunday Times was advising yesterday to stick with the city centre and avoid places with surplus rental property such as Lucan, Blanchardstown and Swords. But the city centre is so expensive that rental yields are not worth the effort. 

Yet I'm convinced that there must still be value somewhere in the buy-to-let market in Ireland. The question is where? As Vinny has pointed out, AAM regulars are full of reasons why you shouldn't invest in Swords/Marbella/Budapest. They're a little less forthcoming on where you should invest.

This is fair enough and I don't expect anyone to share what they believe to be the next big thing for free with complete strangers. I've no problem paying for advice - I just want someplace (seminars, etc) where I'll get loads of ideas. So what if 90% are rubbish? They'd at least give me something to work with.


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## ClubMan (7 Jul 2003)

*Re: Investing*

*They're a little less forthcoming on where you should invest.

This is fair enough and I don't expect anyone to share what they believe to be the next big thing for free with complete strangers.*

Similar to what _Tommy_ has said previously I think that this is a very cynical view and very unfair to regular and sporadic _AAM_ contrbutors who generally provide good advice freely and voluntarily and with no hidden agenda. It's a times like this that I wonder why we bother at all... :\


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## rainyday (7 Jul 2003)

*Re: Investing*



> I just want someplace (seminars, etc) where I'll get loads of ideas.



You seem to have missed Clubmans point - If the guys giving the seminars really knew what the 'next big thing' was, they just wouldn't have time to be giving seminars - they would be too busy jumping into the 'next big thing'.


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## Phoenix (7 Jul 2003)

*Crossed wires*

Hi guys,

I seem to have stepped on everybody's toes. That wasn't my intention  . It's a great site and I enjoyed using it.

So long ......


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## Tamerlane (9 Jul 2003)

All this talk of Kiyosaki and "Rich Dad, Poor Dad" reminded me of a link someone posted here some time ago which was quite critical of him to say the least. I can't remember who posted it but I eventually found the article again on google after a bit of searching. Here's the link

www.johntreed.com/Kiyosaki.html

The author could perhaps be perceived as being on something of a crusade against Kiyosaki (considering the length and detail of the article) but it does make for interesting reading and certainly provides food for thought for those who seem to regard Kiyosaki as some kind of infallible financial guru.


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## Guest (10 Jul 2003)

*What to invest in?*

In you are interested in unit trusts / mutual funds, you may wish to take a look here.www.funds-sp.com


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## ClubMan (10 Jul 2003)

*Re: What to invest in?*

Why? What's the advantage of these S&P funds versus a low charges index tracker or unit linked fund sold on the Irish market? I had a quick look at the site but couldn't find any information on charges? To buy these do you need to covnvert € to US$ first (thus incurring forex charges)?

I'll probably be accused of devils advocacy again now... :\


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## Guest (11 Jul 2003)

*Re: Devil's Advocate*

Clubman

You asked a valid question. 

The main purpose of the site is for one to compare the performance of funds. S&P (also known as Micropal due to some corporate actions) act only as a "historian". They are in the business of rating and not selling funds. They collect information relating to funds all over the world. If I am not wrong, there are something like 70,000+ funds listed in their database.

I believe that the performance of the funds is based on net performance (i.e. less annual fees) but without considering distributors' costs.

In order not to be overwhelmed by the site, you may wish to look for a familiar name and compare it to its peers across the world.


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## ClubMan (11 Jul 2003)

*Re: Devil's Advocate*

I see - thanks for that clarification. I didn't realise that it was a fund performance tracking site and assumed that it was selling index tracking unit funds itself. While it is useful to be able to track performance of the indices on which certain "retail" products may be based people should remember that index tracking is not an exact science (i.e. there will probably be some discrepancies between the index tracker fund performance and that of the underlying tracked index) and, of course, there is no real point in making investment decisions based on past performance.


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## Guest (11 Jul 2003)

*Devil's Advocate*

"of course, there is no real point in making investment decisions based on past performance"

Do you mean a fund manager's past performance does not really matter? 

If for example, you are interested in investing in a unit trust that invests in Continental Europe. There is this manager A that outperforms the MSCI Europe Index say for the past 5 years and this manager B who underperforms the MSCI Europe Index for the past 5 years, which one would you choose?


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## rainyday (11 Jul 2003)

*Re: Devil's Advocate*

Hi Guest - The problem is that you invest in the fund, not the manager. What happens when the manager of Fund A is poached by Fund B for an extra Porsche in his bonus?


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## ClubMan (11 Jul 2003)

*Re: Devil's Advocate*

*Do you mean a fund manager's past performance does not really matter?*

In effect yes - for the reasons mentioned by _Rainyday_ and because last year's best fund manager could easily be this year's loser and also, for index tracking funds (as opposed to actively managed funds) management influence on performance should be negligable as far as I understand things.


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## Guest (12 Jul 2003)

*Summary Trial*

Gentlemen

Based on what you have written, I believe that you have not really explored the website.

When I first came across the S&P website, I was very excited. I have access to so much information at zero cost (other than my broadband and pc). As you might have guessed, I spent a lot of time looking through many funds.

If you are merely looking at equity funds investing in mature markets, I guess you could not go very far wrong with index funds. 

However, the World is not flat. There are tonnes of specialist funds with specific investment themes like high yield bonds, Asian equities, hedge funds, etc. I believe that looking at such funds would be a big eye-opening exercise.

Last but not least, like investing in equities directly, investing in funds is hard work. It means trawling through tonnes of info, useful or otherwise, before you find a good fund to invest in.

P.S. Rainyday, approximately 30% of my portfolio are held in 5 funds. 2 of them are indexed funds. Of the 3 non-indexed funds, the key fund manager(s) own the fund/asset management company in 2 of these funds.


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## ClubMan (12 Jul 2003)

*Re: Summary Trial*

*Based on what you have written, I believe that you have not really explored the website.*

My comments were general and not specifically about the site you mentioned which I only perused in a cursory manner.

*Last but not least, like investing in equities directly, investing in funds is hard work. It means trawling through tonnes of info, useful or otherwise, before you find a good fund to invest in.*

I disagree. I'm happy to simply find a low cost index tracking or unit linked fund that has a suitable mix of underlying assets (e.g. a good mix of sectors and/or geographic regions or something more concentrated if I'm feeling racy), stick the money in and leave it there for a few years. I don't have much faith that poring over technical data and, in particular, past performance figures will improve my chances of making more money to any significant degree.


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## Guest (13 Jul 2003)

*Index Funds?*

Clubman

Finally, I have understood.

You are contented with the up to 8%-10% p.a. returns that equity markets "MIGHT" dish out whereas I am not.

With that, I rest my case.   :hat


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## darag (13 Jul 2003)

*Re: Index Funds?*



> If for example, you are interested in investing in a unit trust that invests in Continental Europe. There is this manager A that outperforms the MSCI Europe Index say for the past 5 years and this manager B who underperforms the MSCI Europe Index for the past 5 years, which one would you choose?


Hi Guest.  Practically all studies into fund performance
have found that the past performance of a fund manager
is no predictor to future performance.  I.e. in your example,
A is no more likely to outperform B in a subsequent period.


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## ClubMan (14 Jul 2003)

*Re: Index Funds?*

*You are contented with the up to 8%-10% p.a. returns that equity markets "MIGHT" dish out whereas I am not.*

Ahhh... the old beat the market/index dream... Good luck with it... :\


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## Dogbert (14 Jul 2003)

*Idex Trackers*

Just to add that in the world of index tracking past performance *is* a good indicator of future performance. If an indexed manager's process has given him a tight margin around the index ("tracking error") in the past, then this can indeed be taken as suggesting that he will track it closely in the future (and vice versa).


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