Category Archives: Investment Planning

Investment Planning – Head not Heart

In our view, long-run investment results for any individual reflect the combination of available capital market returns and the investor’s behavior and temperament. As Warren Buffett has observed, excitement and expenses are the enemy of every investor, and all of us could benefit by examining our inclination to invest with our hearts rather than our heads. The decision to own gold often is motivated by an emotional response to current events, leading to abrupt shifts in asset allocation strategy and a failure to achieve capital market rates of return there for the taking. If adopting a permanent 5% allocation to gold encourages investors to maintain a buy-and-hold strategy for the remaining 95% of their portfolio, perhaps that is the most sensible solution for some. Many other investors undoubtedly will be just as content to stock their portfolios with securities offering interest and dividends—and let gold fulfill their innate human desire for rare and beautiful objects of adornment. Tower Hill Associates view is holding gold or any asset class for that matter as an emotional response to current events is no way for clients to have a successful investment experience. Instead we offer the client centred Tower Hill Associates Investment Philosophy which focuses on achieving financial objectives using low cost well diversified investment strategies and minimising tax.
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Investment Planning – Media and Market Noise

For the everyday investor it is the bigger picture that matters and not media and market noise. Markets are moving constantly as news and information is built into prices. Sentiment is buffeted one way, then the other. Millions of participants make buy and sell decisions based on news or their own individual requirements. The job of media and market analysts frequently boils down to creating plausible narratives around often disconnected events so that it all appears seamless. Then the next day, they start all over again. For a broker or journalist, whose horizons are in minutes, this approach to markets makes sense. But for investors with long-term horizons, second and third guessing money decisions based on the news of the day is unlikely to deliver sound results.
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Investment Planning – Seeing the wood for the trees

I was looking at the total return performance of the IMA UK All Companies Sector and found that the average fund has grown by 307.64% over 20 years. Despite the fact that this performance is flattered by survivorship bias (the performance of funds that have closed down or merged have been removed) it was beaten handsomely by the FTSE ALL SHARE Total Return index which stood at 369.91%.
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Investment Planning – Bad News Sells!

Bad news sells. It sells because fear is a more powerful emotion than greed. Newspaper editors know that, which is why the front pages are often so depressing. But sometimes you need to dig inside the paper for a more balanced view. Also working closely with a chartered financial planner who has an investment philosophy which is client centred and focused on achieving a clients financial goals also helps clients see the investment journey in a much more balanced less fearful way.
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Investment Planning – Embracing Imperfection

New Year's resolutions often involve making promises to ourselves we can never keep. But instead of tilting at windmills, we can often generate better results by merely resolving to be less dumb in certain areas. And money is a good place to start.
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Investment Planning – “When Cash Beats a Portfolio”

I am glad to be part of Matthew Vincent's comment piece "When Cash Beats a Portfolio" in Saturdays FT on 24 September 2011.....Is there any financial advisor out there that would pay over 2% per annum for a well diversified risk benchmarked portfolio never mind one that has a less than 50% chance of beating cash over the longer term? If the answer is no then I don't see why clients should be "advised" (read "sold") into such portfolios.
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Investment Planning – Living with Volatilty

The current renewed volatility in financial markets is reviving unwelcome feelings among many investors—feelings of anxiety, fear and a sense of powerlessness. These are completely natural responses. Acting on those emotions, though, can end up doing us more harm than good. Our investment planning service is built on evidence from leading financial academics and where a financial advisor can add real value can be viewed here.
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Investment Advice – Not the Ryanair of asset management

But the analogy to Ryanair doesn't really work as it is not low cost - 1% per annum for a concentrated mainly buy and hold portfolio is expensive and whilst air fares vary in price I don't suppose they vary as much as 10 or 25 times which would be the case if £100,000 or £250,000 was invested instead of £10,000. It is the same flight at the end of the day!
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Great Investment Planning Videos

I would like to thank Vanguard for allowing me to use two of their investment fundamentals videos on my site. These short videos are by two great investment gurus Charles Ellis and Burton Malkiel and can be viewed here. As well as discussing what good financial planning and investment planning looks like, they also discuss how a financial advisor can add considerable value.
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