When it comes to investing, I reckon most of us have a pretty deluded view of how much risk we’re prepared to take in the chase for better returns. In my case, I learnt a damn hard lesson that your choices must always be properly thought through with the long-term goal in mind.
There are two big cons to being a financial journalist. After 15 years of listening to experts and analysing their performance, you fool yourself into believing you’re an expert too. The second drawback is you’re never paid enough to put into practice your investment “expertise”, particularly if you’ve got kids and a mortgage. (This was long before EasyEquities when I would gladly have had a punt, burnt my fingers, and learnt from some real-life experience.)
The growing popularity of passively traded funds is no mystery if one considers that 80% of active asset managers have not outperformed their benchmarks over the last 5 years. A benchmark is an appropriate market index that a fund manager compares their performance to. For example, the JSE Top 40 is the commonly chosen index for South African Equity funds to benchmark their performance against.