Simple Strategy for Beginner

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capital0ne
capital0ne Posts: 872 Forumite
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in Savings & investments
I'm thinking of a simple method that's trouble free and cost effective to build up a capital sum over a longish (10+) years.

I've come up with investing in just one fund, the top fund for returns over the last six months, and then in six months review the top earning fund at the time and swapping if necessary. Then continue the same process every six months.

I think this will do better than a balanced portfolio, a fund of funds or property even.
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  • coyrls
    coyrls Posts: 2,432 Forumite
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    capital0ne wrote: »
    I think this will do better than a balanced portfolio, a fund of funds or property even.

    On what basis do you think that?
  • ischofie1
    ischofie1 Posts: 215 Forumite
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    I think you'll find buying at the top is not the best policy for wealth creation.
  • lpgm
    lpgm Posts: 355 Forumite
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    The 'top fund for returns' is often likely to be esoteric and volatile, something you'll need to keep a close eye on. This is extreme momentum investing. I don't think it's a particularly simple strategy, for either beginners or non-beginners.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    capital0ne wrote: »

    I've come up with investing in just one fund, the top fund for returns over the last six months, and then in six months review the top earning fund at the time and swapping if necessary. Then continue the same process every six months.

    I think this will do better than a balanced portfolio, a fund of funds or property even.

    What is your criteria for top fund......if an Indonesian Mahogany fund gets the highest return will you buy it? Are you looking at some allocation between stocks and fixed income?

    OK I'll put my 50% US equity index, 25% International Equity Index and 25% US bond index up against your strategy and I'm pretty sure I'll beat you, as would most reasonably constructed portfolios that are broadly based and consider both risk and return.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • grandst
    grandst Posts: 38 Forumite
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    Another curve fitted strategy, if they worked we would all be rich. There are momentum factor ETFs and a momentum multi asset fund by valu trac however I wouldn't bet everything on them.
  • ChesterDog
    ChesterDog Posts: 1,112 Forumite
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    You are, as you say, a beginner to investments.

    Have a think about why you're not finding support for your suggested strategy from those who have been investing for quite a while.

    Lots of beginners will think they have stumbled upon (or have devised for themselves, or have 'seen' that someone somewhere has done well with) some unusual strategy or other.

    There's nothing new under the sun. It's all been tried, and it's all been pretty much abandoned by people with more experience, in favour of well-diversified, balanced, global investments that are held for a long time with minimal messing about except for regular rebalancing of allocations. That is the approach which gives you the best chance at a really good outcome.
    I am one of the Dogs of the Index.
  • Audaxer
    Audaxer Posts: 3,508 Forumite
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    capital0ne wrote: »
    I've come up with investing in just one fund, the top fund for returns over the last six months, and then in six months review the top earning fund at the time and swapping if necessary. Then continue the same process every six months.
    This seems to be the same as the 'bonkers' strategy linked in the recent thread below:
    http://forums.moneysavingexpert.com/showthread.php?t=5722876
  • capital0ne
    capital0ne Posts: 872 Forumite
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    Audaxer wrote: »
    This seems to be the same as the 'bonkers' strategy linked in the recent thread below:
    forums dot moneysavingexpert dot com/showthread.php?t=5722876
    Yep you sussed me out, just trying to get an opinion without referring to that asrticle.

    I think it has some legs, after all the article says it worked over 22 years, 5,662pc cant be sniffed at, worth a go if you ask me.
  • verybigchris
    verybigchris Posts: 630 Forumite
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    capital0ne wrote: »
    Yep you sussed me out, just trying to get an opinion without referring to that asrticle.

    I think it has some legs, after all the article says it worked over 22 years, 5,662pc cant be sniffed at, worth a go if you ask me.

    I suggest you read Malthusian's excellent post in that thread as to why it's not all it seems.
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    I'd out a few quid on a strategy based on the worst performing fund being better than that suggested by the OP.

    No guarantees but the whole principle around rebalancing and reversion to mean would work better for the worst performing fund iver a set period than the best.
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