A study by New Star Asset Management has found that most private investors haven't got a clue when it comes to making investment decisions. The report found that 40% had no idea where to invest and just 21.4% consulted an independent financial adviser.
The most influential factor that clients consider when choosing an investment product was found to be the advice given in banks and building societies. The survey showed that over 42% of respondents said they bought directly from these institutions.
Of all those questioned, the smallest group said that they took tips from the personal finance section of newspapers.
Our view
We have written many times about the fact the we believe even leading fund managers do not really know what will happen to markets. If they were that good, why do they not just borrow £1m personally, invest it, make a fortune, pay the loan off next year and retire?
We call investing in markets 'educated gambling'. If a fund manager gets it wrong some of the time, how can a normal private investor actually know what will happen to the investment market?