However, it is also important to know the difference between investing and speculating. Our view is that investing has a long term goal in mind and this is where we can add value for our clients. A speculative investment is an investment that carries a high level of risk of loss and when an investor hopes to profit from a rapid change in the value of an asset.

For the very reasons explained above, we do not advise on speculative investments as our philosophy is to take the long term investment approach for our clients.

Asset Allocation is the process of dividing the money in investment portfolios between Equities, Bonds and Cash, and is likely to have a bigger impact on portfolio performance than individual investments.

Therefore, we believe that asset allocation and portfolio structure are the key drivers of portfolio returns.

Diversification is the principle of spreading your investment risk or ‘not putting all of your eggs in one basket’. Rather than concentrate in a single company, industry, sector or asset class, diversifying your money means that you are gaining exposure to different national economic and business conditions, and to different industry mixes too.

Different markets can also perform differently. They can shift from being the best performing sector one year, to the worst the following year

Over long periods, high management fees and related expenses can significantly reduce an investor’s net return. Charges taken by the fund manager can impact substantially on the fund returns, especially in flatter markets.

Costs can have a compounding effect over time and so it is important to limit these where possible.

In view of this, our approach is to select a low-cost strategy for our client portfolios.

Markets are hard to beat in the long-run. Attempting to consistently pick the right stock, and perfectly time buying and selling, is incredibly difficult, costly, and often leads to losses over time. Overall, active investment approaches are of little benefit to all but a few investors, but of great benefit to all but a few fund managers, who will continue to charge premiums regardless of performance. Evidence shows that only around 10% of traditional funds beat the market in the long-run, net of costs. Evidence based investing is grounded in understanding world leading scholarship, long-term observations and extensive in-house research, removing the need for the traditional speculative investments.

The practice of evidence based investing is to buy and hold a highly diversified portfolio of low-cost, index funds and, other than rebalancing when necessary, trade as infrequently as possible to minimise costs.