The following video is by Sensible Investing.TV based in the United Kingdom. The video addresses two key lessons learned from academic investing research according to Professor Jens Hagendorff from the University of Edinburgh. The first lesson is that it pays to have a diversified portfolio, not only in asset classes but in geography (meaning investing in many different countries).
The second lesson is that on average, it is not possible to beat the market. So, if you want to enjoy maximum benefit from diversification and avoid taking excessive risk, Professor Hagendorff says the answer is to invest passively.
In other words, you should use funds that simply track an asset class index – capturing market returns at the lowest possible cost. As you will see, the lessons are the same across the pond. Watch below for this interesting video:
Two key lessons you can learn from academic research on investing
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