WHEN Eric Woodward spent £3,000 on a savvy investment, he never dreamed it would be worth £80,000 a decade later.
The 75-year-old reveals how he chose his investment, which is up by 218% over 13 years, and shares his tips to help YOU beat the stock market too.
Eric, a retired financial services worker, who lives in St Albans, decided to invest his cash in the Guinness Global Equity Income Fund after reading about it.
A fund is a bit like a shopping basket of different investments, which are small stakes in companies that you can buy.
It is run by expert fund managers who pick the companies they think will perform best.
Eric liked that the fund was invested in companies around the world in countries including the UK, US, France and China.
It also invests in some of the world’s biggest companies, including the pharmaceutical research firm Abbvie, the food company Danone, and the chipmaker Taiwan Semiconductor.
“The fund wasn’t investing in the same things that everyone else did,” he explains.
Eric decided to invest £3,000 and now adds around £500 to it every month.
He has around 30 investments in total, including other funds and shares in big tech companies including Microsoft, JPMorgan and Goldman Sachs.
But he’s held the Guinness Global Equity Income Fund for the longest.
“It’s an investment you don’t need to worry about,” he explains.
“I review my investments around once every three months, but I’m still happy with the fund.”
Although the stock market has experienced ups and downs in the past few years due to the Covid pandemic and US tariffs, Eric’s investment has continued to grow.
“When the market dips, hot funds can drop by 20% and this fund has never done that,” he said.
“Even in difficult years when most funds are down, it has made money.”
If you want to grow your money like Eric, it can be difficult to know where to start.
Plus, with thousands of funds to choose from, how do you pick the best one?
Here investing journalist Holly Mead reveals the top 30 funds that also beat the stock market and what YOU need to do to invest in them now.
Be your own Wolf of Wall Street – how to pick a winner
Choosing the top-performers of the future is not easy and just because a fund has performed well over the past few years doesn’t mean it will continue to do so.
The past is no guarantee of what will happen in the future, and the value of your investment can go up as well as down.
Looking at a fund’s track record compared to its rivals is a good place to start.
You can find this information on data websites such as Trustnet and Morningstar or investment websites such as AJ Bell and Hargreaves.
Check how it has performed each year (known as discrete performance) rather than on a ten year basis as the overall figure (known as cumulative performance) could hide bad performance in certain years.
Consider the other investments in your portfolio – you don’t want too much overlap in the regions, sectors or companies they invest in.
Check the fees. Funds charge a percentage each year to invest in and some are more expensive than others.
Sometimes there might be a good reason for this – if, for example, it invests in a specialist area such as property – but if it charges significantly more than other similar funds, that could be a red flag.
The average fund fee is about 0.75%, but they can be as low as 0.1% for a fund that just tracks the stock market or 2% or more for specialist funds that invest in private equity.
Eric’s fund has an annual charge of 0.77%, which lets him keep more of his returns.
Find out what it invests in. Fund factsheets can show you the countries and sectors that a fund invests in, as well as a list of its biggest holdings.
Research the fund manager. How long have they been running the fund and do they have experience in the specific area the fund focuses on?
Eric said one of the reasons he continues to invest in the Guinness Global Equity Income Fund is because he trusts the fund managers.
He explains: “The same managers who launched the fund still run it today.”
Ben Yearsley, director at Fairview Investing, explains: “You ideally want a manager who has managed a fund in different market and economic environments.
“You want someone with a sensible investment thesis who has the humility to make changes when needed.
“The past 20 years has seen the great financial crisis, 0% interest rates, Covid and an AI revolution – that’s a lot to throw at a fund.”
Get started with a stocks and shares Isa
The best way to start investing is to set up a stocks and shares Isa.
There are plenty of websites and apps you can do this with – such as Hargreaves Lansdown, AJ Bell, Wealthify and Nutmeg.
You will need to pay a fee for the app or website you use – this is either a flat rate per month or year, or a percentage of the amount you invest.
For example, if you invested £500 and the fee was 0.5%, this would be £2.50 a year – although be sure to check whether there is a minimum charge.
Then you will also pay for the actual investments you choose. This will either be a set charge each time you buy or sell an investment, or a percentage of the amount you invest.
You can often get started and invest with as little as £1, or by setting up a monthly direct debit from £25.
What are the risks?
BEFORE you start investing, you need to understand the risks.
The return you make will depend on how much you invest and where.
As we have seen recently, the stock market can dramatically fall.
The American stock market recently saw its biggest drop since the start of the Covid pandemic after US President Donald Trump announced plans to introduce punitive tariffs on goods imported to the US from other countries.
The UK’s own stock market, the FTSE 100, fell by more than 10 per cent after the news.
You must be prepared to lose it all – so only invest money you can afford to sacrifice.
You need to be willing to invest cash for at least five years to mitigate any dips and allow your money to recover. If you can’t afford to lock up your money for this long, investing may not be right for you.
It’s usually better to drip feed money into your investments instead of putting down a big chunk of money in one go.
Before you start investing, experts say you should have a minimum of six months’ of wages in a savings account before you start and only invest money you can afford to lose.
Star UK funds that turn £100 into £280
The FTSE 100 tracks the biggest one hundred UK companies and is used as a measure of the UK’s stock market.
Over ten years the FTSE 100 is up 108% but 34 investment funds in the UK All Companies sector have outperformed it during this period, according to data from AJ Bell.
Among the top performers is the Artemis UK Select fund, which is up 180.7% over ten years – a £100 investment would have grown to £280.70 over that time.
Its biggest investments include high street stalwart Marks & Spencer, International Consolidated Airline Group (which owns British Airways), and NatWest bank.
Another fund that has outperformed the stock market is Fidelity Special Situations.
This fund invests in UK companies that are out of favour with other investors but which the fund manager believes will recover in the future.
Its biggest investments include the insurance group Aviva, the construction company Cairn Homes, and the tobacco firm Imperial Brands.
A £100 investment in the fund ten years ago would have grown to £226.90.
Hottest US funds that turn £100 into £423
THE S&P 500 tracks the biggest 500 companies in America and is used as a measure of the American stock market’s performance.
The S&P 500 has soared by 323% over the past ten years, so £100 invested a decade ago would be worth £423 today.
But incredibly, some 24 North America funds have beaten this over ten years.
Among them is the Baillie Gifford American fund, which has returned 440.7% in that time, growing £100 to £540.70.
It invests in big names like Meta and Amazon, food delivery app DoorDash, the language app Duolingo and e-commerce platform Shopify.
Go global and turn £100 into £481
Global funds have the freedom to invest in companies across the world, so they have plenty of options to choose from.
The MSCI World is the best-recognised global index, containing 1,325 stocks from countries including the US, UK, China and India.
Over ten years, the MSCI World is up 245%, but some 35 Global funds have beaten these returns over ten years.
The top performer over that time is the MS INVF Global Opportunity fund, which is up 381%. It would have turned £100 into £481.
Another top performer is the Guinness Global Innovators fund, up 323% over ten years, which would have turned £100 into £423.
Top three investing tips for beginners
BRIAN Byrnes, head of personal finance at Moneybox, shares his top tips…
Set a goal: Whether it’s buying a home, retiring early or simply building your wealth – set a target and a timeline for how long you expect to take to reach your goal. Try to dedicate 30 minutes a week to learning about investing topics including stock market trends and compound interest as this will help you feel more confident.
Keep costs – and risks – low: Consider lower-risk options such as index funds, which track a certain stock market like the FTSE 100 or S&P 500. These are often cheaper than other investments and are diversified because they invest in hundreds of companies, which helps to reduce your risk. Investing small amounts every month will help you to stay consistent.
Use an ISA: Every adult can save £20,000 a year into an ISA and all the gains you make are tax-free. If you are saving for your first home, consider a Lifetime Isa – you can save up to £4,000 a year in these accounts and get a 25% bonus from the government. Not having to pay tax on your gains helps to accelerate your growth.