As we continue to progress into an era where data, information and knowledge is widely available and accessible, many have taken the time to personally decide how, when and where to invest.
From property to classic cars to stocks and shares, British investors have more choice to diversify their investment portfolio than ever before. As the world recovers from the recession and a low interest rate environment continues, the traditional approach to managing our investments is less effective than it once was. A simple equities versus bonds mix, with some active handling – and passivity – has not necessarily delivered. The ideal approach is yet to be determined.
Passive Investment
Strictly defined, a passive investment strategy for an individual is where investors who do not have the time, or the desire, to gain a vast knowledge of the stock markets or other asset classes. They tend to follow an index fund or place their trust in fund managers to make decisions for them. The investor here would trade their appetite for risk and a small fee for consistent, but relatively average, returns.
Active Investment
An active investment strategy is the opposite. For this, investors would continuously pursue excess returns through recognition, anticipation and exploitation of short term trends. In theory, short term price movements are more predictable and there are vast data sets available to discover recurring patterns or even anomalies that could bring you a greater return. In practice, this approach is inherently more risky and the investor must give time to educate themselves where they have opted out from professional help.
Investing your time
It might seem that an understanding the technical ins and outs of the stock markets is a compulsory area for investors to educate themselves in, if they opt for a passive or active approach. However, investment alternatives such as Peer-to-Peer lending offer a much needed middle ground, without demanding a lot of time.
An Alternative
Wellesley & Co is a Peer-to-Peer lending platform that offers investors the opportunity to receive up to 6.32% fixed rate of return over 5 years. We ask our investors to have a complete understanding of our asset backed model and also be aware of all of the associated risks before investing. Investors of Peer-to-Peer platforms such as Wellesley & Co do not need to be involved in the day-to-day activity of their investments however, can keep an eye of their investments through the management of their accounts online.
Data and experience
In an era of ‘knowledge economy,’ investing and making a desired return does not need to be a time intensive activity. A savvy investor would use the data and information that is widely available to them as well as their experience to seek out what brings them the most suitable investment. We like to keep our investors up to date with industry developments and information that may affect them through our blog located here.