What are the five key decisions every investor needs to make?

What are the five key decisions every investor needs to make?

Posted by in Book Extracts, Book News, Non-Fiction, Previews, Recommended Reading

When Wall Street veteran Gordon Murray told his good friend and financial advisor Dan Goldie, that he had only six months to live, Dan responded, ‘Do you want to write that book you’ve always wanted to do?’. The result was The Investment Answer, an inspired collaboration which started out as a self-published phenomenon and hit the New York Times bestseller lists on first publication.

Sadly, Gordon Murray died at his home on Saturday 15 January 2011 as a result of the glioblastoma, a type of brain cancer, he had been battling since 2008. But the success of his last lecture for the financial world will ensure that his message is not forgotten.

Piatkus will be publishing the paperback edition of The Investment Answer on the 2nd August, but if you can't wait, here is a sneak preview of the sound advice it has to offer:

Today, the good news is that we expect to live much longer, healthier lives. The life expectancy of a newly retired, 65-year-old couple is more than twenty years – far longer than it was just a few decades ago. Furthermore, new medical advances are announced almost every day to enhance the quality of our lives and help us age more gracefully.

The bad news is that many of us will not have enough money to retire comfortably. In addition, we are told not to count on traditional pension plans or government benefits. Whether we are saving for a deposit on a house, our child’s education, or a comfortable retirement, the need for us to invest wisely is more important now that ever.

The unfortunate truth when it comes to investing is that many of us are scared and don’t know where to start. The stock market feels like a casino with the odds stacked against us. We are intimidated by the language of investments and are wary of recommendations from financial analysts. As a result, it is not hard to understand why so many of us are confused about what to do with our money and are uncertain about how to make smart financial decisions.

As a patient and disciplined investor with a longer time horizon, financial markets can become your ally rather than your adversary. All you have to do is make five informed decisions that will allow you to take advantage of the wisdom that Nobel Prize winners have acquired over the past six decades to stack the investment odds in your favour.

These decisions are:

1.       The Do-It-Yourself Decision

Should you try to invest on your own or seek help from an investment professional? And if so, which type of advisor is best?

2.       The Asset Allocation Decision

How should you allocate your investments among stocks (equities), bonds (fixed income) and cash (money market funds)?

3.       The Diversification Decision

Which specific asset classes within these broad categories should you include in your portfolio, and in what proportions?

4.       The Active versus Passive Decision

Should you favour an actively managed approach to investing that seeks to outsmart the market, or a more passive approach that delivers market-like returns?

5.       The Rebalancing Decision

When should you sell certain assets in your portfolio and when should you buy more?

By learning how to make these five informed investment decisions that capture the essence of investing, you will never again be afraid of financial markets or uncertain about what to do with your money. You will no longer be a speculator . . . you will be an investor.

The Investment Answer will be available to buy from all good bookshops on the 2nd August. You will also be able to download this title as an ebook from all the major ebook retailers, so you can read it on your Kindle, iPad, Kobo or Sony Reader.

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