Chapter 10. Final Thoughts

These are my nine key takeaways for DIY investors:

• If in doubt, save and invest a little bit more – the rewards will pay you back for years.
• If you can’t sleep at night, you are probably not investing the right way for your particular needs and temperament.
• Patience is probably the most important discipline you need as an investor, and the hardest to maintain, especially when media commentators are either deeply gloomy or exceedingly optimistic. Keeping your head in these circumstances is the most important requirement of all.
• Don’t be afraid of your own judgement. One thing I have learnt is that there are many clever people out there, but being clever and having common sense don’t always go together. Since the financial crisis of 2008 most clever people seem to have been spectacularly wrong about many things.
• You need to find your own way and style of investing. I can tell you the mistakes I have made and I hope you will learn from them, but you have to find out what works for you and what suits your temperament.
• If there is one rule for investment it is that there is always an exception to that rule.
• Try not to get trapped in your own personal history and experience. The low inflation of the 1950s and 1960s trapped many into thinking that gilts were a solid, safe investment. In the 1970s high inflation wiped those investments out. Then, just when everyone had come to despise them in the late 1970s, along came a 30-year bull market in bonds! Today the talk is all of deflation. Anyone born in the 1980s or later can only remember low inflation and interest rates that rarely change and never go up. Do not presume that this will continue indefinitely. It won’t. If you can spot the inflection point you will make a lot of money.
• Always have an open mind and be ready to question the statistics and any research you see. I have discovered over the years that much of it is very poor and flawed.
• When buying a fund make sure you look under the bonnet to get an understanding of the philosophy and style of the fund manager. This will help you respond the right way when things go right or wrong. If you know why you will be more likely to buy or sell at the right time, which is all that investing is ultimately about.