What the Tour de France 2020 can teach us about investing

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This year’s Tour de France will be different from previous editions.

Like many others in 2020, the race has been forced to adapt in light of the coronavirus pandemic. Small crowds, masks and strict testing protocols will reflect the conditions that delayed the race from its original start date in June.

The teams were also warned that two positive tests within their camp during the race would see their entire team withdrawn and sent home. It is therefore possible that everything will be canceled before the traditional Parisian final.

Spectators around the world are hopeful that all goes according to plan when the race begins on Saturday. But what can this historic event teach us about investing?

This article is not personal advice. If in doubt, seek advice. The value of investments goes up and down, so you can get back less than you invest.

It’s all in the team

Since the first race in 1903, the Tour de France has been one of the toughest endurance events on the sporting calendar. Over a 23-day period, each athlete will be pushed to their limits by covering 3,470 km (2,156 miles).

But no runner can win the race alone.

This year’s race consists of 21 stages and there are five competitions in total. If each stage can be won by a different rider, the cyclist who arrives at the top of the general classification is crowned champion of the general classification.

To achieve victory, the overall winner will need a strong team behind him. The 176 runners who start the race are divided into 22 teams of eight, each team supporting its lead runner with so-called “servants”. These servants – or “minions” – work to support the team’s lead runner by setting the pace, moving against rival teams or defending attacks. Each will have their own strengths, which they use for the good of the team.

Variety plays an equally important role in investing. Consider building your portfolio as well as choosing a Tour de France “dream team”. You will want different riders to support you at different points in the race. People to accompany you on an ascent through the mountains, as well as on a flat sprint.

By diversifying into a range of asset classes, sectors and regions of the world, you can help maintain your balance in different market conditions. But remember that like a cycle through the Pyrenees, the value of investments can go down as well as up.

Learn more about diversification and why we think it makes sense.

The benefits of diversification

Stick to your plan

The different jerseys

  • The yellow jersey – The big price. Awarded to the winner of the “general classification”.
  • The green jersey – Awarded to the runner with the highest number of points. One for all-rounders.
  • Polka dot jersey – Also known as the King of the Mountains. It goes to the rider with the most points from the mountain sections of the race.
  • The white jersey – Similar to the yellow jersey, but only for runners under 26 in January of that year.

One of the special features of the Tour de France is that you can win the overall race – claiming the famous yellow jersey – without winning any of the 21 individual stages. Indeed, the general classification is awarded to the rider with the best overall time (after taking into account bonuses and penalties).

So if you go for the big deal, you better be patient. There’s no point in making the fastest start or breaking away from the peloton (the peloton), if that doesn’t match your overall strategy for winning the race.

In fact, most Tour riders will not be serious contenders for the yellow jersey. They could be looking to support their main runner or look for one of the alternative prizes. It follows that if you want to claim the polka dot jersey (otherwise known as the “king of the mountains”), you will want to conserve energy for those parts of the race.

It’s a similar situation with investing. What are your goals? How many risks are you willing to take along the way? Knowing where you are going should help you get there, whether it’s choosing the right account or choosing a fund to invest in.

Once you’ve made your plan, stick to it. While flexibility can pay off, we think it makes sense to focus on your long-term goals, ignoring short-term fads and fads.

Be prepared for the pain

No rider starts the Tour de France expecting an easy ride.

Cuts, bruises and accidents are all part of cycling. The physical and mental tension is likely to be intense. But for those cyclists who are lucky enough to participate, racing in the Tour is worth it.

We think it’s important to be just as realistic about investing. There will be ups and downs. Some investments will perform better than others. But the longer you invest, the higher your chances of getting a positive return. In fact, according to the Barclays 2019 gilt equity study, by investing in the stock market for 10 years, you would have outperformed cash 91% of the time. This will not necessarily be the case in the future.

Being able to keep your cool should be seen as a positive trait for both runners and investors. When investing, this can sometimes mean doing nothing at all. Rather than trying to time the market by selling and selling investments, it can often make more sense to stay tight.

For example, if you had missed the ten best days in the market since 2000 – that’s 10 out of over 5,000 trading days – you would have just over half the return than if you stayed invested. Instead of going down to just over £ 21,000 *, an investment of £ 10,000 fell to just under £ 11,000 when invested in the FTSE All-Share. There is no guarantee that this will happen again and past performance is no guarantee of the future.

Missing the 10 best days in the UK market since 2000

Past performance is no guarantee of the future. Source: * Lipper IM as of 08/27/2020

If you are just starting to invest, learn more about what it entails by watching our videos.

Start with the basics

Success doesn’t have to be exciting

The success of Team Sky (now known as Team INEOS) over the past few years may have been well received by fans of UK pilots, but it hasn’t come without some criticism from spectators. Sometimes referred to as boring, the team’s stubborn tactics are a good example of how success doesn’t always have to be thrilling.

Investors can learn from this in at least two ways. Neither how you invest nor what you invest in doesn’t have to be exciting to be successful.

One way to take advantage of a “hands off” investing approach is to set up a direct debit, so you invest regularly every month. You will still need to keep an eye on your investments, but you won’t have to worry about the timing of the market or forgetting to add spare money. And you can get started from just £ 25 a month.

You might decide to take a similar approach to choosing investments. With funds, for example, you can choose your degree of adventure in your approach, depending on your personal situation, your attitude to risk and your goals. You can choose a fund that tracks an index or invest with a manager that you hope will outperform over the long term. We have highlighted a range of both on our Wealth Shortlist. Remember that the value of all investments can go down as well as up, so you may get back less than what you invested.

Guide to investing in funds

By staying focused on your end goal, you should give yourself a better chance for overall success. So be patient. Be stubborn. And don’t be afraid to be boring along the way.


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