How to Get a 62.9% One Year Return on Your ISA - Part 3 of 4
By Stephen Sutherland, author of Liquid Millionaire.Posted in the Category of ISAS, Investing, Stock Market, Psychology of Investing on 4th August, 2010.
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How would you like to return over 60% in one year?
Do you think that sort of 12 month performance excite you?
If it would, then you are going to love what I have to share with you.
Last week I began sharing with you our secret to how we’ve managed to beat the market over the long-term.
I stated that the answer lay in three key things.
1. Knowing which direction the market is likely to head.
2. Knowing how to find high quality investment funds.
3. Knowing when to buy and sell these funds at the most opportune times.
Last week I began with point 1. Knowing which direction the market is likely to head.
This week we are going to move onto point 2. Knowing how to find high quality investment funds.
How to Find High Quality Investment Funds
What do you know about investment funds? In case you are unsure, an investment fund is a pooled investment vehicle that allows investors like you and me to invest in the stock market. They are controlled and managed by a professional investor who is called a fund manager.
These fund managers buy stocks (companies) that they believe are going to rise in value. If they choose well, the fund’s value will do well and all the people invested in the fund will be rewarded with an increase in their investment portfolio.
Investment funds are the investment vehicles that have the power to grow your account at 12% per year if you choose well. Investment fund managers are like football managers. If you can find a fund manager with an outstanding track record you’ve cracked it. The challenge is that in the UK there are over one thousand ISA funds to choose from and so unless you know what you are doing and how to check various performance gauges, it is very easy to pick a dud fund.
One website that I like to use frequently to help me quickly find potential winning funds (and it’s free) is called Morningstar. You can find it by going to http://www.morningstar.co.uk
To explain what I mean about the similarities of investment fund managers and football managers, I’ll use British football manager, Sir Alex Ferguson as an example.
Let me ask you a question.
Sir Alex Ferguson is renowned for having a great track record. What are the chances that he will do well next season?
The answer is, he will probably do well. Of course, there is no guarantee, but the probability of him performing well next season is pretty high.
That same principle applies to fund managers. In other words, when fund managers have great track records, they are also likely to keep doing well in the future.
In Friday’s blog, we will complete this lesson by looking at the third and final point, which is:- Knowing when to buy and sell these funds at the most opportune times.
Until next my friend.
If you would like to know more about how we manage to beat the market over the long-term, and request a FREE Telephone Consultation (£1,997 value) or obtain a FREE copy of my book Liquid Millionaire, get in touch.
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