"HatTip" - "It's Not Exactly Rocket Science"

"K.I.S.S" - Keep It Simple, Stupid. If only: the language of financial advice seems perpetually caught in a fog of obfuscation, double meanings and jargon.

Why though? It does NOT have to be this way. Solid financial planning is NOT rocket science. Rocket science is rocket science, as this clip demonstrates.

So I am all for anything that encourages a simpler approach, viz the report the Cass Business School has just published damning the vast majority of investment fund managers.



For investors, the take-out from the Cass report is to remember to “K.I.S.S.”, to keep it simple.

Unfortunately, many people and institutions in financial services seem keen to perpetuate the myth that dispensing financial advice is akin to rocket science.

This, dear reader, is complete and utter horrocks.

Proper financial planning has four simple constituents.

Everything else is just noise: lazy copy emailed in to wedge between the insurance company adverts.

1) Have A Plan
Think about what you want from your life. Then have an educated guess at what this lifestyle will cost, for the rest of your days. Finally, work out how you are going to fund this (petrifyingly enormous) amount. In other words, work out your “Number”.

2) Stick To Plain Vanilla
Boring, mainstream financial products: for most people, that is all they need to use to achieve their life goals. Think ISAs, collective funds, personal pensions. Really, that is probably all you need. If you speak to an adviser who blinds you with rocket science about some "can't fail" product or investment, remember what Mr Einstein said: "If you can't explain it simply, you don't understand it well enough."

And, for my sake, punch such an adviser on the nose: When these "can't fail" products do fail, it is Muggins here who picks up the bill.

3) Keep An Eye On Costs
As the Cass research shows, there is little to gain from trying to identify the next star manager. But there is lots to lose, in terms of cost, missing market gains, poor stock decisions and so forth. Make sure your adviser has a stated, methodological investment philosophy. And make sure your adviser invests his money where he wants you to stick yours.

4) Stick To The Plan
This is the toughie. A place where emotions enter stage left and reason scarpers stage right. Where there will always be reasons to save less, to spend more: you needed that gadget, this holiday, those Global kitchen knives (highly recommend these beauties, BTW).

As well, there will be nasty periods when your investments plummet in value - guaranteed. You will wobble, maybe lose your resolve and consider scrapping your plan, vowing never to enter “the markets” again.

You need to “Stick To The Plan” when all about you are losing theirs, to butcher the metaphor. Constantly review your plan. Hone it: The plan must remain relevant to your life, your experiences, your desires, your goals.

In terms of your long-term financial health the biggest enemy can often be you. Or rather, your reaction to events. We help our clients to stay on course, "on plan". After all, it's not rocket science.

"HatTip" - It's Your Money: How Do We Invest It?

In our view, educated investors are happier investors.

In this post we outline our approach to investing client money. It will help you understand what we do (and why) with your investments.

To start, please watch the documentary below (not our work in any way). This is split into eight bite size segments. Grab your phone, tablet, PC or laptop and watch these as and when you can. You will learn an awful lot about the beliefs that underpin the advice we give to all of our clients.

Our "Investment Philosophy and Asset Allocation Policy" distills these beliefs into one side of A4.

Our "Statement of Independent Investment Principles (SIIP)" expands on the above and shows simulated performance for our range of Model Portfolios. For the record, past performance really is no guarantee of likely future returns.

You can even have a go at reading some of the literature that we have digested over the years. Particularly recommended is "The Investment Answer". It packs an awful lot of common sense into just 80-odd pages.

If our investment message resonates with you, come in and say "hello". As we say elsewhere, we are quite clear as to who we work with (and who we do not)!

"HatTip" - Fool's Gold

Gold is doing what it generally does best: quietly disappointing people.

Yet three or four years ago articles espousing the wonders of gold as an investment were commonplace. Presently, however, such glowing testimonials are hard to find. Why?

Gold does not produce anything of value nor does it provide a stream of income. You buy it and hope another mug will eventually come along and offer you more for it. This is the "Greater Fool" investment approach (see also the "Dot.Com Boom" of the late 1990s).

So what is the appeal?

Gold is touted as a great way (often seemingly the only way) to protect your wealth against inflation. Over the last 30 years inflation has been relatively benign. The metal would not have needed to exert itself much to retain its value in real terms.

The question is: "Has It?"

In real terms (allowing for inflation) over the 30 years to the end of May 2014 gold has returned just over 1% a year. Before purchase and storage costs, that is. So, over a period of time where inflation has been low, gold has barely kept up with rising prices.

Pretty though, ain't it?!

In that 30 year time span there were periods when gold did spectacularly well. Which means - to achieve an average of 1% a year - there were also periods when it did spectacularly badly. By the time the hacks and the rent-a-gobs in the financial press were talking gold up as an investment the gains were gone: yesterday's return gives nothing to today's investor.

So why the love?

In 1984 you could just have easily bought an index linked gilt and held it to maturity; that would have guaranteed you an inflation busting return. But index linked gilts are not exciting, whereas gold has an allure, a literal as well as physical lustre, for some speculators investors.

30 years may sound like a very long time: in investment terms it is just a long time. Time enough for an asset class to assert itself. What has gold done?