The Only Investment Fund You Will Ever Need

Описание: You are probably already aware of the two ways of investment management.

You have ‘active’ investors who believe they can beat the returns of the market and then you have ‘passive’ or ‘index’ investors who don’t make any buy or sell decisions but copy what the market does.

There is so much data out there that shows how active investors fail to consistently beat the market over the long term especially when you factor in their higher costs.

So, for now I’m going to focus on passive investing. Tracking the market rather than trying to beat it.

What is the market though? What do we copy?

There are a lot of ways investing gets over complicated but if we go back to basics, the market everyone should first focus on is the overall global market.

The allocation of global capital. This is the combined wisdom of every investor out there. Where does everyone in the world allocate their capital?

Passive investors often like to use a quote from Vanguard Founder Jack Bogle, “Don’t look for the needle in the haystack. Just buy the haystack.”

Well, the global market is the ultimate haystack.

If you were to buy and track the entire market, you would own a piece of every listed business in the world. You would benefit from the success of all the major established companies and all the upcoming young ones. You would also own a lot of rubbish as well but that doesn’t matter.

Stock market returns are driven by just 4% of all stocks. The problem is that it’s incredibly difficult to identify these stocks in advance. At least by buying and holding everything you would hold the 4%.

Choosing not to invest in the entire global market means you are taking an active decision. You are going against the combined might of the world. How can you be sure you know better?

In this video, I’ll explain how to actually invest in the global market and how you could even do this by using just one fund.

It’s worth pointing out here that we are only focusing on your stock market or equity investing here. There is still a place in your overall portfolio for other assets such as property, gold and maybe even cryptocurrency but that’s for another day.

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