How to put your investing on autopilot

by , 19 August 2013

One of the most important keys to investment success is also one of the simplest. You need to ensure you make the effort to save and put money away regularly for your future. But what's the best way to go about doing this?

‘Rand cost averaging’ is one of the most popular ways to invest regularly, explains Phil Oakley in MoneyWeek.

This is where you invest a constant amount of money each month, or every few months.

The logic of the approach is that markets go up and down a lot, for a wide range of reasons.

Because of this it is virtually impossible for investors to time their purchases so that they always buy when prices are low.

Stop Thinking You Can't Get Rich!


Fundamentally Selected Shares Could Turn R5,000 into R16,088.50

You could make a fortune with the potentially explosive shares hand-picked by our market expert.

And we'll give you all the details in our FREE Red Hot Report. But don't delay, because it's only a matter of time before everyone else catches on to the shares we've tipped. And when they do, prices could soar. Our sold recommendations from Jan 2002 to Dec 2014 have made an incredible average gain of 33.10% each. And this year, despite the current volatile markets, we expect our tips to do even better.  

So click here to claim your FREE Red Hot Report now, and find out how to get your hands on the 5 amazing share tips plus a FREE Investment Library worth R1,040.

If you put your savings on autopilot, you sometimes buy things when they are cheap, and at other times when they are expensive.

Over time you hope to smooth out the average cost of investing and boost your long-term performance.

This method has a lot to commend it.

It’s almost a ‘buy and forget’ strategy and it does a good job of taking the emotions out of investing. That’s so important, as often it’s our emotions that drive our worst investment mistakes.

However, as with most things in life, rand cost averaging is not perfect.

That’s because there are no rules for when to sell an investment.

Rebalancing allows you to get rid of the duds

For example, during the late 1990s, you could easily have continued to buy into overpriced stock markets. But you would lose a lot when they crashed a few years later.

The best strategies are the ones that can help you buy when prices are low and sell when they get too high.

One such strategy is ‘rebalancing’.

You set out target allocations for different investments in your portfolio. For example, 40% in shares, 50% in bonds and 10% in gold.

Then once a year or so, you sell some of what has done well and buy some of what has done poorly. This keeps your portfolio within its target allocations.

So if at the end of the year, shares take up 50% of your portfolio and bonds 40%, you’d sell some shares and buy some bonds. That’s if you are still happy with your allocation.

Rebalancing has a decent track record. It improves long-term returns and reduces risks – something every investor should aim to do.

So there you have it, how to save and put money away regularly for your future.




Related articles



Ask our Experts a Question


Related articles


Watch And Learn




Trending Topics





Comments
1 comments



philippe 2013-08-19 22:22:29

I would like to get into this autopilot investing but don't have a lot to spend what are the minimum amounts and what do I need to do to get started?

Regards
Philippe


© 2016 FSPInvest.co.za. All rights reserved.

Contact Us | Privacy Policy | Our products | About Us | Disclaimer | Ask a Question | Glossary | Our Shop | Welcome To Trading Tips | Welcome to Money Morning | Events Calender | Welcome to FSPInvest

Disclaimer
Note that FSP Invest, a division of Fleet Street Publications (Pty) Ltd, is a research house and not a registered broker, financial advisor or financial service provider. Our editors and customer services teams also do not give personal investment advice. The advice in this website is general advice only and may not be appropriate to your particular investment objectives, financial situation or particular needs, so before investing or if in any doubt about your personal situation, you should seek professional advice from a stockbroker or independent financial adviser authorised by the Financial Services Board. 
We research our recommendations and articles thoroughly, but disclaim all liability for any inaccuracies or omissions found in this publication.
 
Remember: Never invest more than you can afford to spare and that the value of any investment, and the income derived from it, can go down as well as up. The past is not necessarily a guide to future performance.
 
Editors or contributors may have an interest in investments commented on in this newsletter. However they have signed restraints to prevent the abuse of their position as contributors to this publication.
 
© Copyright 2016 Fleet Street Publications (Pty) Ltd. Registered in SA No: 1999/019170/07, Vat No: 4430185282

Free report:
FOREX 101: The beginners guide to making money from money


Enter your email address below to get your report in the next minute.
«
powered by
Fokus Digital Services