There are many types of investments that we can utilise to increase wealth for the future, investing in shares is one of the most successful. Different investments yield different returns and have varying degrees of risks attached to them. The global share markets (stocks) have proved to be a profitable place to invest over time. The graph below shows that stocks have outperformed other asset classes since 1802 by turning $1 into $704,997. It also shows how inflation turns $1 cash stuck under the mattress into 5c 200 years later!
Source: Stocks for the Long Run by Jeremy J. Siegel
These simple ABC’s of investing in shares could help start the process:
Advice
Investing in shares can seem like a complicated and complex process. It is critical to seek out private wealth managers that are knowledgeable about share portfolios. A good wealth manager is able to understand future needs and investment goals, and take that and turn it into a flexible, all-encompassing, creative investment portfolio.
Whilst it is possible to trade in shares alone, the highs and lows of the stock market are often best navigated with an experienced wealth manager who can help you through the critical decision making.
Our values ensure that our clients are not given a “one-size-fits-all” fund. Each client portfolio is invested based on their personal needs and goals, which means that better returns are possible and available for those wanting to build private wealth.
Brands
A good place to start is to look at purchasing stock in respected global brands like Nike, Microsoft, Unilever etc. Companies that are successful over a long period and create good returns are usually companies that provide the brands and products that we know and use every day. Start by considering the brands that are loved around the world.
What is really great about investing in a global brand, is that as their profits grow, they pay yearly dividends to their shareholders. So not only will there be value in investing over the longer term in a strong organisation, but the dividends provide funds that can be used to further invest or as a yearly income.
Warren Buffet’s investment philosophy is firm in the belief, that a global brand with a strong heritage, a strong cash flow and an innovative spirit is the best stock to buy. Most of the big global brands have been around for a very long time and have weathered the storm, even through market declines and stock market crashes.
A global brand also mitigates risk, because it is not dependent on a single market. These global brands earn revenue and profits from established markets like the United States and Europe and from emerging markets like China and India.
Costs
Many of us have very little or no knowledge of what costs are involved in investment and how to judge if the cost of investment is reasonable or not. It is important to do enough research into investment fees, don’t end up paying more for management fees than what is actually made through investing.
Some wealth managers will charge high fees and will have very little transparency in this regard. Find an investment partner that understands that building wealth for the future is a key priority.
If you are looking at investing in shares and need to talk to an experienced and knowledgeable wealth manager to help guide you through this process, contact AXIAM.