Invest for the long term

If you wish to invest for 10 years or longer, my advice is:

- invest in a large fund which is benchmarked to the market index
- choose global equities
- choose a fund with low charges (upfront and annual charges)
- select the right time to realise the investment.

A large fund allows you to diversify and minimise your risk. The fund should have 100 or more investments. If any of the investments turn bad, the impact is likely to be small and is more than offset by the good investments.

By investing for a long period, you can average out the good and bad years. This will give you a good average return. The average return on global equities over a 10 year period has been from 7% to 10% per annum. This is higher than other asset classes.

A global equity fund gives better diversification, compared to investing in any specific country (eg Japan) or sector (eg technology).

By benchmarking to the market index, the fund manager has to invest in the large, well managed companies. This will reduce the speculative risk.

If your fund has low charges, say less than 1% per year, you will be earn most of the return (instead of paying the fund manager).

If you choose the right time to realise your investment, you can get a better return than average. Do not quit when the market is depressed. By patient. Wait some times for the market to recover, and quit at that time.