Monday, 13 January 2014

Chris Dillow's 14 Steps to Investing Success

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Although I don't think I benefited financially from my subscription to Investor's Chronicle, it did introduce me to Chris Dillow's thoughtful articles on investment. In particular he takes a quite analytical view of the evidence of market statistics and behavioural research.

Chris has produced one of the best articles on investment I have seen recently in his '14 Steps to Investing Success in 2014'. (And I think the tips are valid for most years!)

You should read the article for the full details - I'm still mining his references - but it might whet your appetite if I give you the headlines and my review of how the DIY Income Investor approach ticks the boxes:
  1. Minimise taxes: tick!
  2. Remember tracker funds: tick! - no flashy active funds, just income-producing ETFs.
  3. Simplify. Don’t over-diversify: no more than 5% of the portfolio in anything - but the current 40-odd different securities is probably too many to follow in any detail.
  4. Diversify across assets – including cash: Tick! A quarter of total financial assets are in cash - all tax-free and currently earning an average of 4.35% .
  5. Don’t be a noise trader: tick! An average of around one or two trades a month.  
  6. Respect the seasons: No (this is one of the few of Chris's things that I am not sure about - although he has evidence).
  7. Don’t follow old wives’ tales: tick!
  8. Don’t be one of the herd: tick!
  9. Be disciplined: if it means following your own 'rules', then tick!
  10. Be aware of the subconscious influences upon your investments: sort-of-tick - aware but not always in control!
  11. Avoid wishful thinking: hard to judge that one but hopefully the approach is realistic.
  12. Be wary of Aim stocks, but not yet: sort-of tick (no AIM stocks).
  13. Get rich slow: double tick!
  14. Be comfortable: double tick - cheap living and sound sleep.

How does your investing approach score?



I am not a financial adviser and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.

2 comments:

  1. Good list. I could probably improve a little on 4, 10 and 12!

    I think the biggest obstacle facing amateur investors is no 8. Not following the crowd is perhaps the hardest to achieve as for most of us our personalities seem hard wired to follow the masses.

    Developing your own trading strategy, approach to research and [crucially] following through with both is the most important thing for any investor to remember.

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  2. We made one trade last year.

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