Making a Million Using Stocks and Shares ISAs - Part 6 of 26
By Stephen Sutherland, author of Liquid Millionaire.Posted in the Category of ISAS, Investing, Investment Fund, Wealth Building on 13th February, 2010.
Tags: investment fund, isa, isa trend investing, liquid millionaire, market, million, nasdaq.
Over the last few months, I’ve been writing an ISA Trend Investing Guide that shows you how you could make a million using ISAs.
Over the next few weeks/months, I’ll be giving you an exclusive sneak preview before the main newspapers get their hands on it because I suspect that some time in the future, you’ll be seeing a copy inside your favourite weekend broadsheet.
In my previous blog I started to share with you how investment funds can make you “liquid” rich.
Today, I’m going to explain why making it a goal to beat the market is so important.
What do we mean when we say ‘Beating the Market’?
• If the stock market averages 3% per year over the next 10 years, your system wants to average more than 3%.
• If the stock market averages 8% per year over the next 10 years, your system wants to average more than 8%.
• If the stock market averages 13% per year over the next 10 years, your system wants to average more than 13%.
Beating the market means simply staying ahead of the indexes over the long term.
And so if the stock market averaged 10% per year over the next ten years, and your ISA account averaged 12 or 14% per year, that’s what you’d call a success.
The term beating the market means being able to beat / outperform the main stock market indexes such as the FTSE 100, the S&P 500 or the Nasdaq Composite.
Did you know that some stock indexes perform better over the long-term* than others?
Yes it’s true. For example:
But how has the Nasdaq Composite performed versus the FTSE 100? As you can see on this next chart, the Nasdaq has more than doubled its performance.
Aiming to beating the Nasdaq would therefore be a much harder goal than trying to beat the Dow, the S&P 500 or the FTSE 100 – but as I’m sure you’ll agree, it is a worthy goal for an adventurous investor.
Beating a strong market index like the Nasdaq Composite is not easy to do. In fact most fund managers find it hard to beat the FTSE 100 and the S&P 500.
But some investors have proven that it can be done. That means that if others have done it, it’s possible for you to do it too.
In summary, you must have a benchmark to measure against to help you gauge how well you are doing with your investing. If you don’t measure, you can’t manage. It’s that simple.
At ISACO, we use the Nasdaq Composite as our benchmark. We are fortunate to have an investment fund screening tool called HIRE CAR™ that has so far managed to stay ahead of both the FTSE 100 and the Nasdaq Composite.
Next week I’m going to start to share with you 7 lessons about how the stock market works. And learning those lessons could really help you accelerate towards your goals. Until next time my friend.
Find Out More
If you would like to find out more about how you can make a million pounds through using an ISA and help make you a liquid millionaire then please contact a member of my team for a chat. You have my word there will be no sales, no jargon, just the facts.
Your friend,
Stephen Sutherland
The UK’s Leading Authority in ISA Trend Investing and Author of Liquid Millionaire
Please Note: As always, let me remind you that I am not a financial adviser and therefore not authorised to give advice on what investments to buy or sell.
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