£407 or £91 per week

The best tip to keeping your family’s investments intact is to be fresh in your head at all times and leave the past behind.
Peter McGahan

BUYING winners and selling losers is the key to making the best returns for your investments, and countless newspaper column inches will have your Fear of Losing out (FOLO) adequately teased with the bullseye statement of ‘just look at what you could've won'.

On the flip side, ‘customer apathy' is perhaps the biggest risk I see within a family's lifetime savings and investments.

‘They are all the same', ‘I'm not saving much to make a difference anyway' are expensive thought processes, and perhaps the biggest risk in the psyche of an investor.

Remember a couple of weeks ago the difference between the worst and best pension fund returns over 20 years. Over just 20 years, £100,000 had grown to £605,000 with the best company, and £135,902 with the lowest.

Imagine the change in lifestyle at retirement with that fund alone. At a drawdown of say 3.5 per cent, one provides £21,175 per year or £407.21 per week, and the other, just £4,756 per year, or £91.56 per week.

I can't believe that along the way, an investor didn't think to assess that fund performance (it was from a leading fund management group).

Whilst fear of losing out or apathy are two key psychological components on how not to make the most of your money, there are others.

Undoubtedly, herds create markets. Panic selling through fear of losing, and panic buying through fear of losing out, come from the two poles of fear and greed. We are all on that line somewhere.

The best tip to keeping your family's investments intact is to be fresh in your head at all times and leave the past behind.

Because investors have a greater fear of losing than they do of gaining, accepting that a bad decision has been made is a much more difficult thing to do. There can be a tendency to cling to a previous decision and hope it just gets better.

I've made a few decisions like that in the past, but as the farmer said, “it ain't worth trying to make a pig fly”. Two reasons why: “The pig ain't ever gonna fly, and you just irritate the pigs”.

When you do your six monthly review of your investments, consider zero based thinking. Knowing what I now know would I buy this investment?

If the answer is no, check the impact on your tax and move it.

So often we have the urge to carry our bias with us and we become that herd - the herd that sells when everyone is selling and buys when everyone is buying.

The real market makers are selling when you are buying (because they are selling to you), and buying when you are selling.

And so to your choice of information. The internet is full of it, and most of it is pure noise, designed to sell arguments.

Choose carefully where you read and how much. Personally I limit the information to the very best economists and fund managers. Our research has shown us and that way we can remain reasonably sane and make good decisions.

Remember our brain guesses the bits of data it doesn't have and swirls that around with our emotional biases to concoct…'perhaps buy more crypto currency'?

It can be a war in your head between your limbic (speedy thought and emotional) and the cortex (the logical thinking, calculating, conceptualizing) system.

Some tips to avoid all of that:

Drop all confirmation biases; Review six monthly and without emotion; if there are losses, they are losses, take it on the chin and move on with the learning that brought you; don't use hindsight as a bias. Just because something has fallen in price (the market) doesn't make it cheap. It can get a whole lot cheaper; use the very best managers and allow them to diversify you. You won't always be ahead and you won't always be behind, but you should be up there with the leaders.

If you aren't review and take action.

In doing so, you will create the greater options to take your family through their life financially.

:: Peter McGahan is chief executive of independent financial adviser, Worldwide Financial Planning, which is authorised and regulated by the Financial Conduct Authority. For more information call Darren McKeever on 028 6863 2692, email or visit

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