Drawing the Battle lines – Investment Sins

Cardinal sins of investing:

Not beating the market

When investing for your future, you have two options. Active or Passive management. Active management (a fund manager making decisions on your investments) is supported by Wall Street firms, banks, insurance companies who – you guessed it – charge the fees and therefore have a vested interest in charging you for their “expertise”. Lots of large financial institutions charge up to 3% of the whole value of your investment per annum just for selling you that “expertise” and paying the expert’s bonuses. And you know what? Active management (most of the time) does not beat a computer!

Passive management is backed up by scientific research by university academics and private research houses. It is a proven method of gaining returns that track the market and saving oneself from the silly facts of behavioural investment. Passive investment is usually performed by a computer tracking a set market, such as the FTSE 100 (the top 100 companies in the UK). Indeed investing passively can increase gains by as much as 2.1% over active management and charges you a lot less for the privilege. That is something the big banks won’t tell you!

Don’t put up with financial advisors and large investment companies charging you massive fees for “experts” managing your money. At best it isn’t good value and at worst it is a systematic scam with a smile. Don’t commit an investment sin. Save for your future not theirs.

More sins to follow.