Business

I’ve always considered investment trusts to be among the very best long-term defensive investments. There’s a couple of key reasons.

One is that, unlike handing over money to typical fund managers, there’s no conflict of interest. Fund managers are answerable to their bosses, to the companies they work for. They’re there to maximise the size of the slice taken by the company’s owners. But when they’re working for investment trusts, that’s you, me, the people who stump up the cash. When we invest by buying shares in an investment trust, we become the owners.

The other key thing I like about investment trusts is the way they’re allowed to handle dividends. Cash on the books can be accumulated during good spells and is handed out as extra during tougher years. And experience shows that the top trusts manage their cash flow and their dividends in a conservative and sustainable way.… Read more

If there’s another stock market crash, like the one we saw back in March, I know most investors like me will want to be in a position to capitalise. The best time to buy shares is when markets are down. It’s not as easy in practice, however.

Usually crashes aren’t easy to predict (otherwise everyone would make money from the stock market) and there’s an opportunity cost in keeping too much cash parked on the sidelines for too long. Cash loses value over time because of inflation.

Here’s what I’d do to make the most of any future market crash.

Review holdings frequently

One of the things that should be an ongoing process for most serious investors is reviewing investments. This is all the more needed when markets are looking expensive or a bull run has been rampaging for some time. High price-to-earnings ratios, people not usually interested in … Read more

The surging gold price may have encouraged many investors to buy the yellow metal in recent months. But this might not be the best way to become rich and retire early. Instead, it may be better to follow the advice of Warren Buffett. 

Warren Buffett’s view on gold

Buffett has always been against buying gold. According to the billionaire investor, buying it is a waste of money because it produces no cash. And most of the time, owners have to actually pay to store their gold. 

As a result, all owners can do is sit tight and hope the price of gold keeps rising. On the other hand, companies produce cash, which supports their share prices.

That’s why Buffett likes owning stocks over precious metals like gold. He believes stocks are more likely to produce better returns over the long term. And so far, he’s been right. Stocks have substantially … Read more