by Scott Pape - October 25th 2008
What should investors do with their money?
Sell out last November would be my best advice.
But then you didn’t do that did you? Me neither.
Oh well, looks like we’re all subprime now.
If there’s one upside to the downside, it’s that hopefully investors will take a more active role with their money or perhaps more to the point, in managing their investment managers.
History suggests that the bulk of our investment returns boils down to just two things: the asset class we invest in, and the fees we pay.
ETFs and LICs
That being the case, ask your financial adviser about low-cost Exchange Traded Funds (ETFs) and Listed Investment Companies (LICs) such as Australian Foundation Investment Company, and Argo Investments.
These investments pay franked dividends, have strong track records over decades and most importantly don’t pay kickbacks to salespeople (which is probably why they’ve never suggested them to you).
In troubled times it’s a smart strategy to look at what the best investors are doing with their money and follow suit. Warren Buffett, the most successful investor in the world, says: “Be fearful when other people are greedy and greedy when other people are fearful.”
The billionaire has publicly stated that he is doing just that – buying shares at prices that are in some cases half what apparently rational people were happy to pay six months ago. Buffett is bullish about the future as am I.
While I don’t believe this global recession will be over before the next ad break, I do have a long-term faith in the value of human ingenuity, and the companies that are built on the back of it.
Photo: www.flickr.com/photos/astragony/4878485871/
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1 comment
For an Aussie with simple tax affairs, what is the tax treatment of a LIC and of an ETF? Do they simply send a dividend advice twice a year, just like bank shares do? What about when an ETF or LIC makes a capital gain?