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For many getting started, understanding how to invest can be a challenge. Knowing what to invest and where can seem daunting. For the very wealthy it is business as usual, and they have devised strategies and tactics to make sure their wealth can really work for them, but it is harder for smaller or new investors. According to Richard Dyson (2012), reporting for This Is Money , the very wealthy have focused on creating portfolios and organisations where generally they own a large share. However, in most cases, small investors were not aware that they could invest in these. However, in recent years, changes to regulations have been made such that these sorts of investments are more suitable for smaller investors as well. According to Dyson, one such company to invest in is RIT Capital Partners (“RIT”) ( OTCPK:RITPF ), in which the Rothschilds, an extremely rich family, has a large share. As explained: “Lord Rothschild and his family own 18% of what began in the early 1960s under the name of Rothschild Investment Trust.” It is cited that growth has been achieved to the position where RIT is now worth £1.8 billion, and the Rothschilds own £324 million of that. This has been extremely attractive as a proposition for investment to other private investors, especially as the investment has a superb record over a long history. The assets included are property and hedge funds, among others. History of Wealth The Rothschilds have been growing their wealth for a time span of more than 200 years, and they are considered one of the richest families of all time. Investor Network explains that the family originally made money from the Napoleonic Wars by supporting the side of the English in battling Napoleon. Rothschild was aware that the battle was lost for Napoleon, and he knew this ahead of other investors. This enabled him to purchase much of the stock market at a very favourable price, and when the news came out about Napoleon’s defeat, the market grew tremendously. In addition, the money lent was repaid, and overall, the family did really well out of the war. They continued to do well, and by 1825 they were in such a strong position that they were able to prop up the Bank of England when there was a financial crisis faced. Following this, the family invested in stocks and made shrewd investments and financial decisions that have led to the wealth accrued today. RIT Capital Partners is a good opportunity because small investors have gained significantly over the time it has been up and running. It is reported that the trust has delivered returns, on average, of 12.4 per cent per year. The approach taken is to make sure that investors’ capital is safeguarded as far as possible in the event of stock market crashes. This is beneficial in terms of risk, as there is lower exposure, but it is detrimental when the stock markets rise rapidly, and the investment will be likely to not perform as well as other opportunities in the markets at those times. Investing in RIT will help you invest like the Rothschilds. The cost of the fund is 1.25% per year. Experts say that it is a particularly good investment for pensions. Alternatively, you can learn from the way they operate. The family uses a multi-asset approach, which spreads the wealth across a range of different investments. This includes anything from gold, to shares in a range of high performing companies like eBay (NASDAQ: EBAY ), Walt Disney (NYSE: DIS ) and Samsung ( OTC:SSNLF ). It has also invested in gold, and it has funds that are focused on commodities, including BlackRock Gold and General and Baker Steel Precious Metals. In taking the approach that it does, it holds onto liquidity appropriately, and focuses on long-term benefits rather than short-term gains. Golden Rules of Contrarian Investing The approach taken by the Rothschilds is known as contrarian investing. Basically, those who follow this approach buy when there is bad news and sell when there is good news. It is thought that this is wise, because when there is good news on the stock market, investors are likely to pay a high price for it. On the other hand, when there is bad news, investors are more likely to get a good deal, as others are in fear of buying at those times. There are 5 golden rules of contrarian investing : When you read about it in the newspapers or see it on the news, it is already all over. Buy when everyone wants to sell, and sell when everyone wants to buy. No one sees a bubble when their income depends on it. Don’t take tips or advice, and don’t believe research notes. What is obvious to you is not obvious to others. Rationality and Risk Although it seems like extremely risky investment strategy, it is based on the principle of “rationality” . It might seem a bit contradictory, but it has a sense, as rationality is based on healthy evaluation of any financial decisions apart from current trends or experts’ advice. The latter, in turn, might be over-reliable, or under/overpriced. Not Contrarian Investment Strategy Contrarian Investment Strategy While efficient market hypotheses are based on stock prices reflecting the financial situation of industry, company or economy in question, the contrarians believe that the market can be beaten by keeping a rational investing viewpoint. They do it by being independent thinkers and controlling their optimistic and pessimistic feelings. To become a contrarian investor, you’ll need to go against the market trends, against the crowd and against social pressures. You’ll need to go for an optimism visible to yourself only. Uncertainty is a right time for investment for a contrarian investor, who will need to have a lot of patience as well as time for such a risky long-term strategy. Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks. Scalper1 News
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