This is boring but its important

There are so many ways to trade it can take you years to figure out what is right for you. However, we can put all of them into three simple categories.

Firstly, there is day-trading. Self-explanatory. You are in a trade sometime during the day, and you are out of the trade before the day ends. Great fun. But few make a profit doing this.

Secondly, there is short-term trading (often referred to as swing trading). My preferred trading style. You follow the rhythm of the share price and try to catch the most lucrative part. You’re in for a few days to a few weeks. Using this style you may miss the big up, but you have a fair chance of missing the big down too!

Thirdly, longer term trading. What most of you have through your mutual fund investments and pension funds. Recall that over the more extended period, every 1 percent in charges results in you giving back to the fund some 20 percent of your final amount. So if your fund were worth £100,000 after 40 years of investing the average mutual fund would have cost you between £40,000 to £60,000. That’s a significant chunk. Few people realise this, and this is why mutual fund managers remain in the top echelons of earners.

The younger investor ought to choose a low-cost index tracker fund. It will win hands down over most mutual or managed funds.

The mature investor should always consider fixed index annuities – Read Tony Robbins, money master the game. It’s only 616 pages! Or take my word for it.

We should consider another problem with the mutual fund (and there are several more) is the equity crash that seems to come around now and again. If you were financially retiring in 2008, your long-term investment would be half of what you expected. If you had more than 15 years to retirement, your fund could recover if it were in US stocks. Most UK shares have not even yet recovered to the high of 2008.

Discuss with your independent financial advisor fixed index annuities such as (from Tony Robbins): Barclays Dynamic Balance Index (a mix of stocks and bonds) and Morgan Stanley Dynamic Allocation Index (a blend of 12 different sectors). Your IFA should find you UK index equivalents if you prefer.

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