The Concept of an Investment Deathmatch
If you are seeking a unique way to tackle investment decision-making, consider setting up what could be referred to as an ‘investment deathmatch’ in your portfolio. The idea is simple: multiple investments picked by yourself vie against each other, aiming for the best return and the most substantial balance. The process involves simultaneous investing of equal amounts of money in several investment funds. By simply monitoring the fund balances, you can easily compare their performances.
Advantages of the Investment Deathmatch
There are several pros to implementing the investment deathmatch strategy in your portfolio. It allows you to gain valuable experience in choosing a variety of investments. It offers the opportunity to learn from witnessing the comparative performances of different investments over time. Using the results from your investment performance, you can then choose to invest additional funds into your top-performing funds.
Setting Up Your Investment Deathmatch
While it might seem tempting to select funds from the same investment category for your deathmatch, there is more to gain from picking funds across various categories. Not only does this bring more diversity to your portfolio, but it also reduces risk in the event of one investment sector failing. Some examples of fund categories you could choose from include S&P 500 index funds, growth funds, mid-cap funds, and any investment that you feel could yield a good performance such as international funds, real estate investment trusts (REITs), or gold funds.
Investment Selection Criteria
Once you have defined your investment categories, the next stage involves in-depth research and choosing your preferred fund in every category. Some of the essential criteria to keep in mind at this stage include the investment objective, active versus passive management, fees or expense ratio, performance record or return, and management team tenure.
Maintaining the Deathmatch
With your roster of investment funds ready, your next move is to evenly allocate a set amount into each one. This makes it effortless to compare performances by mere inspection of the fund balances. Monitoring becomes straightforward—whichever fund has the biggest balance is winning. Over time, better-performing investments will emerge, and you might decide to leave the winners as they are and set up a new deathmatch with funds from less performing investments. Remember, the real winner of the investment deathmatch is you as you become more adept at investing and watching your portfolio grow.