Want to know the intelligent way to compound your investment returns? Follow these 15 steps:
- Invest in businesses run by visionary founder owners with skin in the game (minimum 10% ownership of shares in the company)
- Invest in monopolies, duopolies of oligopolies. In other words invest in companies that dominate their sector or dominate it with the fewest competitors possible
- Invest in companies that have a high Return on Invested Capital (ROIC)
- Invest in businesses that increase their turnover and their gross profit margin consistently
- Focus on high free cash flow
- Invest in businesses that buy back their own shares regularly
- Invest in high growth sectors
- Invest in sectors where there is a large total addressable market
- Ignore metrics which can be easily manipulated such as PE ratios, EBITDA, EPS
- Invest in businesses that have a great culture especially ones that really look after their employees
- Invest in businesses that are obsessed about customer service
- Buy companies at a fair or low price but never at a high price
- Don’t sell businesses unless they have lost their edge, the market has changed or the new management is not up to it
- Invest in companies that exhibit frugality
- Constantly review your holdings and question whether you would buy those stocks if you wee starting out. If the answer is no then sell them.
This is a buy and hold strategy using a quality investing style. If you follow this strategy you are likely to experience great investment success. However, you require these three essentials;
- Time
- Inclination
- Skill
If you don’t have all three then why not delegate to a fund manager such as Minerva Money Management and invest in the Intelligent Wealth Fund instead? You know it makes sense.*
Tony Byrne, Managing Director
If you want to learn more about this topic, please find the link here.
More information about our fund can be found here: Hargreaves Lansdown or AJ Bell
*Risk warnings
The value of investments can fall as well as rise. You may not get back what you invest. The information contained within this article is for guidance only and does not constitute advice which should be sought before taking any action or inaction. All information is based on our current understanding of taxation, legislation, regulations and case law in the current tax year. Any levels and bases of relief from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. This blog is based on my own observations and opinions.
