Sound Financial Group Blog

ah yes the dulcet tones of Ken Dodd. January 16th was ‘Blue Monday’ – identified as the most miserable day of the year in Britain due to factors such as a long cold month, post-Christmas debt levels, payday still two weeks away, divorces on the increase, etc...

In previous blogs I have droned on about the costs to invest and how in the UK they are, in the main, too high. Despite constant press coverage, charges appear to show little signs of reducing and so I make no apologies for starting my 2012 blogs with yet another about investment charges, but this time in relation to ‘advice’.

So roll out the predictions for 2012...

When is past performance not past performance? Investors need to understand how the performance tables of many fund sectors can be skewed to show improved returns.

More column inches in the press last weekend in respect of the worst performing investment funds, or ‘dogs’ as they affectionately known. But what does this mean for investors who hold such funds?

This week’s blog tries to bring a little bit of sanity back into a mad world. The voice of reason reiterates that investors should not panic buy or sell, but have their portfolios managed and maintained based upon an investment objective, the investors risk profile and risk tolerance level

The word ‘absolutely’ is one of those that is used with such annoying frequency that it has lost all sense of its true meaning.

Cost is a vital consideration within fund management and you need to ask yourself how much are you paying in investment charges within your Pensions, ISAs, etc…but it’s not just cost that’s important...

As human beings we are programmed to behave in ways that help us survive, not to make good investment decisions…

Comparison between the self control attributed in life (note to self to leave the chocolates alone and do more exercise) and the self control and discipline required when investing or more specifically the returns received from investments.

Consideration given to the performance of the active fund management industry as per the '[analysis of returns produced by Thankes River Multi Capital's 'consistency ratio' with some below-par statistics.

Consideration to the use of active fund managers and their performance - or lack of!

is something that many believe they have mastered, but in reality few appear to have achieved. In our experience being a successful investor involves the following 6 disciplines:
1.    Faith in the future – The rise in human progress and the ability through capitalism to combine skilled labour with natural resources and intellectual capital to build great companies that innovate and change our future.

2.    Patience – Resisting the desire to react to news and world events and translate this into some form of action that rather than add to the returns of a portfolio, will detract from it (due to turnover costs for example and the inability to ‘market time’).

Well quite a lot actually when it comes to the world of Investments. We have been critical of the confusing names and labels given to investment funds, names such as ‘cautious’ or ‘balanced’ do not necessarily do what they say on the tin and many consumers have been confused.

Such confusion was well founded when during the financial crisis of 2008/09 so called ‘cautious’ funds fell by as much as 28% in one year! This lead to a rise in complaints being taken up by The Financial Ombudsman.