top of page

Extract from: How to Invest: Navigating the brave new world of personal investment, Economist Books, © 2023  Peter Stanyer, Masood Javaid, Stephen Satchell.    Reproduction of this website extract is permitted so long as full attribution is provided.


We’re all investors now


Easy to use, instantly available, inexpensive stock trading platforms have become an unmissable feature of personal investing in recent years. But how do new investors decide to what to buy and how much? And should they join the reported 100 million-plus worldwide who have ventured into buying cryptocurrencies, and if so, which cryptocurrencies? These are archetypal 21st-century investment challenges for individual investors. This book provides signposts to help steer though the fog, and sometimes the excitement, that clouds the way through.


It is easy to miss how fast the world of personal investing has changed. Love it or loathe it or just not interested in it, tens of millions are now directly involved in investment markets to a degree not known by earlier generations. This includes many millions who now have personal pension accounts and personal responsibility for pension savings and their retirement income in a way that was largely unknown in the last century. The shift of financial accountability from employers to employees has been breathtaking. Many, though, have probably gone with the flow and scarcely noticed it.


As the first quarter of the new century draws to a close, fintech innovations seem on the cusp of transforming banking and payments systems and perhaps going on to change the nature of money and with it our understanding of safe assets.


This comes after years of loose monetary policy, low interest rates and seemingly expensive stock markets. In combination with ready access to the new trading platforms and financial sector innovation, we are facing a situation that, in all likelihood, makes sudden financial crises more likely. All investors have been challenged by cautious investments that offered little secure income and the experience of losses in value as interest rates and inflation rose. In our opinion, these are compelling reasons to keep investments simple and not get carried away by the prospect of making easy money. There is, we believe, simply no such thing.


The aim of our book is to help investors navigate this new world. As markets are transformed, investors need to be able to think beyond dodgy online chatter and to challenge investment company salesmen who will be motivated to recommend the latest new financial product.


Instead, we offer 18 key principles that will help investors make sensible decisions when they feel tempted that they “ought to be able to do better”. For example, our first chapter is called “Where’s the beef?”, a reminder to us all that we should only make an investment if we find the investment case convincing. The investment principles that underpin the book will help investors reduce the chance of making major investment mistakes. They are:


  1. Always look for the substance in any investment proposal (Chapter 1)

  2. When investing, take time to decide, then do it (Chapter 2)

  3. The glory of compounding accrues most easily to those who adopt a sensible strategy and add regular contributions to it over long periods (Chapter 3)

  4. Expensive fees are a dead weight that drag down living standards in retirement (Chapter 3)

  5. If you see easy money to be made in the stock market or anywhere else, you have not looked hard enough (Chapter 4)

  6. Star managers don’t walk on water (Chapter 4)

  7. Most stocks underperform the stock market (Chapter 4)

  8. Be modest in your expectations for investment returns, and over time compounding will look after you (Chapter 4)

  9. When investing for the long term, it is better to be a tortoise than a hare (Chapters 1, 4 and 5)

  10. We don’t believe anyone knows where interest rates and inflation will be in 15 years’ time, and this matters (Chapter 5)

  11. You will not be able to avoid the surprising bad times in the years ahead so you should know how you and your savings will cope with them (Chapter 5)

  12. Investing in a global equity tracker fund can be a surprisingly sensible way to invest in equities (Chapters 6 and 8)

  13. If adjusting your investments to reflect environmental, social and governance priorities, remember to keep your investments well diversified (Chapter 8)

  14. In times of acute crisis, government bonds are still the investor’s best friend. But over time, they are always vulnerable to inflation (Chapters 4, 5 and 9)

  15. In bad times, corporate bonds always show their intrinsic and unhelpful link to stock market volatility (Chapter 9)

  16. Property is at the heart of everyone’s finances and well-being

  17. Patient individual investors in real estate investment trusts can be in a stronger position than many institutional investors to benefit from investing in real estate (Chapter 11)

  18. Investing in things you enjoy owning or supporting gives you more than just monetary rewards (Chapters 8 and 12).


Investment controversies

There are many popular investment books, but few provide a dispassionate up-to-date review of the controversies that surround the management of personal savings and wealth in the 21st century. How safe are government bonds and could crypto assets (and especially that subset of crypto assets called stable coins) provide an attractive alternative? How should the threat of man-made climate change affect investing? Is index investing – buying an index fund that looks to replicate the performance of a chosen stock or bond market – compatible with good governance? How much do we know about future inflation and interest rates? Is a global approach to investing best or should we have more in our home markets? These are some of the controversies that are explored in this book.


There is usually no need for investors to reconcile competing arguments, or to align strongly with either side of a dispute; instead, they need to think through how unresolved debate influences the uncertainty that accompanies their investment strategy. That is what this book seeks to do, in a way that is intended to be of practical use.


No investor, however large or small their wealth, needs to feel bamboozled by advisers into adopting a complicated strategy they do not understand. The book does discuss more sophisticated ways of investing, but any investor can always sit back and say, “No, I want to keep things simple but appropriate.”


Peter Stanyer

Masood Javaid

Stephen Satchell

February 2023



bottom of page