Why it’s better to create your own “My Investment Trust” rather than buying a mutual fund
The essence of asset management isthe process of creating a “My Investment Trust” that fits your own needs.
For young people, you should center your portfolio on companies with expected growth,and if you are already retired, focus on high-dividend stocks and REITs to supplement your pension.
Disadvantages of Investment Trusts
There are investment trusts such as “growth stock funds” and “high-dividend stock funds,” but these are active funds, andthe fees are set quite high. Fees have a negative impact the longer the investment period lasts.
Also,investment trusts do not tell you the timing of buy opportunities. For individual stocks you can reference quantitative and qualitative evaluations such as PER and management status, but it is practically difficult to analyze every stock included in an investment trust.
Even worse,Japanese investment trusts often end their operations within a few years. This is the negative side of securities companies and fund companies that focus solely on selling. In essence, investment management should be long-term, yet Japanese investment trusts go in the opposite direction.
Another merit of investment trusts is diversification. Indeed, if you diversify across many holdings, you can avoid catastrophic losses. However,it is said that a good diversification effect can actually be achieved with about 10 holdings.
Pick 10 stocks and gradually buy when they decline
In other words,than buying a mediocre investment trust, it is better to acquire about 10 stocks that suit your needs at the appropriate timing.
For example, if you want to build a high-dividend fund, you should select several from the top of the dividend yield rankings that appear to have sustainable dividends.
If you don’t care about the immediate yield but want steady growth, you might consider choosing consecutive dividend-increasing stocks.
As for me,I include stocks with steady business growth that are not overvalued. If a company grows, there may be no need to replace the stock.
What is important here is tonot buy the picked stocks immediately. Many people want to buy at a time when the market is likely overvalued, and even if that isn’t the case, with long-term investing, it’s certainly better to buy at a lower price.
What kind of ideal investment trust do you seek? If you can imagine it,you can achieve it by selecting appropriate stocks and gradually including them when cheap. Please consider this as a mental exercise.
