Dan is my eldest son and works with me. On Sunday 17 March he completed the Shrewsbury 10K in under one hour. He ran with his wife, Jess. It’s a race but it’s also a time trial. It’s a race for those at the front and the winner finishes first. (doh) It’s a time trail as each runner has a chip in their shirts so that when they pass the start and finish lines, they know their own race time. As they run around the course, there are Pacers. If you can see them, you can judge where you should be to get the time you want.
So what? What’s new?
In the investment world, I talk about measurement. Imagine your money is in a race. Do you know how fast it is going? In other words, you need to know how much it costs you to manage your money (as that is a drag on your returns) and how you are performing? Do you know these numbers? I bet you don’t. The point of the pacer is to judge your speed and to make sure you are on track. Do you know if your money is on track? How are you measuring your money against a benchmark (or a pacer) to know where you should be? I bet you don’t.
Let us suppose you are in the 1% of people who think they know costs, performance and whether they are on track, are you absolutely sure you know? How confident are you? In the words of Einstein, could you explain it to a six-year-old, with clarity?
As an investor, be honest with yourself. If you have no clear idea about costs, performance and where you should be on your investment journey, how do you measure success? Unless you know how to measure, it’s a mistake. And mistakes cost money. Big time.
The money industry wants to help you with your decisions but ultimately they want to manage your money for you. Whether its investments, ISA’s, Pensions, Trusts. If you choose to let others take control, that’s fine, but you need tools to assess their success. If you want to take more control yourself but have not the confidence and skills yet, you can do more than you think.
If you want to know more about whether you DIY or delegate, get the resources here https://bit.ly/2QH71Iy