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I think that the three things that a Private Investor can control that will make the biggest difference to his long-term returns are Costs, Taxes and Asset allocation.

  • Particularly in the low-return environment we’ve experienced since 2008, high running costs will kill your returns.

And compared to most of my investing career, the tax regime here in the UK is now very benign:

  • You can put £40K pa into a SIPP
  • You can put £15K pa (£20K from next year) into an ISA
  • You can build up a £1M pension pot
  • You can make as much money on your primary residence as you like

That really is an invitation to sort out your future

And then the third thing is asset allocation, which is just the flip-side of diversification.

  • Most people keep their savings in cash, which is a bad option in the long-run.
  • Then they graduate to UK funds and stocks
  • But you need to have money outside the UK, and in property and commodities like gold, and things like private equity and infrastructure funds as well.

Category: Lessons and Rules

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