investing

Ignore the ‘experts’

By periodically investing in an index fund the know-nothing investor can outperform most investment professionals.

For those who missed it, Stockspot featured in The Age, Sydney Morning Herald, and Financial Observer this month. We continue to receive great support from financial advisers, accountants and individuals who are ready for a smarter way to invest.
 

By periodically investing in an index fund… the know-nothing investor can actually outperform most investment professionals”
– Warren Buffett


The Australian Exchange Traded Fund (ETF) market has seen another strong year of growth. ETF assets grew 56% this year to just shy of $10 billion.

To put that in perspective, Canada (which has a slightly smaller superannuation pool than Australia), topped $60 billion of ETF assets this year. That puts Australia about 8 years behind other developed markets on the adoption of low-cost funds.

We think Australia’s catchup to the rest of the world will continue to accelerate over the next few years as more investors embrace transparent and fee-focused investment advice.

The Hon Malcolm Turnbull MP has released his investment portfolio holdings to parliament. We were impressed to see that Mr Turnbull uses 13 different ETFs to build his globally diversified portfolio.

Stockspot will employ a similar approach to diversification with out 5 different risk-focused ETF model portfolios. We have published the December monthly performance so you can check how our portfolios are performing.

Our ETF Indices continue to track in line with our risk and return expectations. The higher risk portfolio (Topaz) is up 8.0% this year and our lowest risk portfolio (Amethyst) is up 4.4%.

performance-chart


In the financial advice space, NAB has announced plans to introduce a ‘lite’ advice option, finally recognising, like us, that “a lot of Australians won’t pay $4,000 or $5,000 for a financial plan”.

We wonder whether NAB and other banks will subsidise their ‘lower cost’ advice with a bigger push to recommend ‘higher cost’ in house products? Already 72% of NAB customers are being directed into NAB products according to a recent study by Roy Morgan.

Several market strategists could be looking for work after their ASX200 predictions were off the mark by up to 20% this year. Further proof that you don’t need to pay high priced experts for their views. Even one of the worlds greatest investors, Warren Buffett, wrote in this 1993 investor newsletter “By periodically investing in an index fund… the know-nothing investor can actually outperform most investment professionals.”

Find out how Stockspot makes it easy to grow your wealth and invest in your future.


Founder and CEO

Chris has been vocal in calling out the industry 'Fat Cats' and is known for telling it as it is. He sits on two Advisory Committees for the industry regulator ASIC, and was previously a fund manager at UBS. He holds a Bachelor of Commerce (Accounting/Finance Co-op Scholarship) from UNSW.

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