When my grandson was born my wife`s mother invested a £1000 for him. This was placed with Invesco Perpetual in a Managed Fund. Sixteen years later following the introduction of Junior ISAs we were able to transfer the grand sum of £1950 into one of these. This represented a pathetic growth of 95%.
Now my grandson is mathematically skilled and well able to understand the vagaries of currency, stock-market and fund movements. He is also of an age where a bit of excitement does not go amiss. Between us we agreed that as D.C.I Hunt would have said “Now was the time to fire up the Quattro”. Two years later his portfolio stands at £3050 a growth of 56%. Keep that up for another ten years and he has £30,000 towards a deposit on a house. So what rules did we lay down for our investment strategy?
-We would use only the weekly numbers and statistics published by The Saltydog Investor.
-We would not be swayed by the opinions of financial pundits, thereby avoiding being shipwrecked in an ocean of information.
-We would only be invested in a few funds which were all in growth I.A .sectors, and if such a sector did not exist at the time we would be in cash. That made for a very simple all or nothing pie-chart.
-The key point of this approach was for him to understand that it would be essential to be an active investor on a weekly basis when necessary.
So far this approach has been successful, but it is definitely not for the shy or those close to retirement. The last two years has seen him invested at different times in basically four sectors, Technology, China, UK Smaller companies and Japan. Currently technology funds such as Scottish Mortgage Trust, Polar Capital Technology, L&G Global Technology and AXA Framlington Global Technology have been carrying him forward.
There is no doubt that a good run of momentum feels amazingly good, and really can undo the knots in your rope. It is however inevitable that you will lose sometimes. The trick is not to make a habit of it!