The latest edition of our fortnightly email newsletter was sent to subscribers today - Tuesday 11th November.
In this edition we take a look at the reasons why we favour passive investing, we take a look at the Prosperity Index, provide a summary of the movements in markets over the past fortnight and look at the case for being careful with only investing in cash.
We are also pleased to provide a link to a new online service comparing credit cards, loans and deposit accounts in the Australian market place as well as introducing a new section to the newsletter looking at case studies as requested by users of our website and this newsletter.
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The following is the lead article for the newsletter:
Financial Topic Demystified - Passive Investing
A natural question to be asking, in the midst of what is one of the worst share market declines in history, is what investment approach is going to serve you best going forward. Our firm remains committed to a passive approach to investing. In this edition we want to spell out why we favour this approach.
The following is taken from our latest book - A Clear Direction - Being a Successful CEO of Your Life.
In earlier chapters we looked at managed funds and saw that they were ineffective investment vehicles when compared to the simpler strategy of investing in index funds. We also saw that passive funds that capture the small company and value company premiums discovered by Fama and French in the early 1990's allow passive investors to build portfolios that will outperform the simple index.
We looked at the importance of asset allocation and discussed the fact that asset allocation is the key driver of investment returns. By using passive funds we are able to focus on building an asset allocation that suits the requirements of each investor.