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Investing in Funds Online
Sunday 25 March 2007 12:02AM
A new 12-part guide to funds, written by the founder of Independent Investor, explains how you can use the resources of the Internet to avoid the common mistakes that cause most fund investors to experience indifferent results.
The guide is designed to help the private investor make better investment decisions, using the power and convenience of the Internet as your friend. Successful fund investing, I believe, need not be complicated, but nor is it as easy as the fund industry and fund advisers would have you believe.
All the available evidence suggests that many investors fail to make the most of what funds have to offer. One well-known study in the United States found that the average equity fund investor achieved just 60% of the stock market's return over a 20-year period from 1986-2005. UK experience has been similar.
A key theme of my new book is that the growth of the Internet gives private investors the chance to take much greater control over their own investment decisions. It is no accident that fund supermarkets, online sites where you can research, buy, sell and monitor hundreds of different unit trusts and OEICs, are the fastest growing sales channel for funds in the country.
By using the vast array of regularly updated information available on the Internet, private investors today have access to more detailed information about funds than most professional advisers had ten years ago. The opportunity to do better with your investments is therefore clear. The challenge is to make the most of the new information and multiplicity of choices that are now available.
With that in mind, Investing in Funds Online sets out to describe, in simple, readable language, the true benefits and pitfalls of buying unit trusts and OEICs, using the best available online tools. The guide is available in two formats: (1) as a hard cover book; and (2) as a series of 12 downloadable pdfs (each one regularly updated). The text is illustrated with a series of clear and informative graphics.
After 25 years of analysing and writing about finacnial markets, I have become convinced that that avoiding the most common mistakes can materially improve your investment returns. Understanding the commercial dynamics of the funds business – who stands to gain what whenever you buy a fund – is another essential part of doing better.
The only sure way to avoid disappointment. the guide concludes, is to wise up to the way that the funds business works and to take a more active interest in which funds you own. That need not be time-consuming – taking more than 3-4 decisions a year is more than enough - but you do need good information and a clear idea of what you are trying to achieve.
Whether or not you use a financial adviser, as many investors still do, taking advantage of the information and control that online investing now provides will, I am confident, save you a lot of money over the course of an investing lifetime.
Jonathan Davis
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