A visionary entrepreneur and global investor, Jim Mellon has a flair for spotting global trends. He has built a worldwide business empire off the back of many successful investments.
Here’s what we learned during a whirlwind half hour with the man who not only predicted the 2007/8 credit crunch but also regularly appears among the top 10% in the Sunday Times Rich List:
1. It’s ok to make mistakes. If you’re relatively new to investing, there’s often a tendency to think that seasoned investors must have a secret recipe for success. But every investor, no matter how experienced, will have investments that haven’t gone according to plan. Even an investment pro like Jim has companies in his personal portfolio that are either “defunct, struggling, or in the lifeboat,” he says.
2. Emotion can cloud your judgement. With careful planning, certain investment mistakes could, however, be side-stepped, Jim believes. He says that too many of his less successful investments have resulted from impulsive decisions. “Although going with your gut instinct can sometimes lead to good outcomes, for investment purposes, I feel that a more considered approach is needed,” he admits. One way that Jim manages to do this is by working closely with a team of specialist investment advisers.
3. Financial knowledge matters. Keeping your investment knowledge up-to-date can also play a role in helping you become a more seasoned investor, says Jim. He’s a self-confessed information hound who “religiously reads 30-40 magazines every week, even at Christmas.” With so many online tools available, Jim also believes it is easier than ever for people to access learning materials about investing. “It’s about everyone being in a process of continuous education,” Jim says. “We live in a very low return world and you have to be much more proactive about the process of saving and thinking about the future”.
4. You’re never too young to invest. As people start living longer, and “according to scientific research there is already one person who has reached the age of 150,” Jim believes that everyone will need investments to support their lifestyle. “Government and/or corporate pensions will be insufficient to cover all their needs, from food through to healthcare,” he says. As such, Jim’s view is that it could be beneficial for people to start saving and investing at the earliest opportunity. “If, for example, you earn £1,500 a month, which is the average net salary here in the UK for a single person, perhaps consider taking a little bit out of your pay packet, giving up those two nights out a month, and putting some money aside for your future.”
5. Technology is shaping the future of investing. The rise of online portals is making investment much more accessible for everyone, says Jim, and he sees this as a growing market. “Today, circa 40% of the people in the UK use online banking and I would imagine that will rise to 80-100% at some time in the future. So, if you’re prepared to trust an online bank, why not be prepared to trust a serious online investment company?”
Further in the future, Jim also sees technological advancements such as quantum computing (developing computer technology based on the principles of quantum theory) having a dramatic effect on the way investment analysis is carried out and on how future investment trends are spotted. “It’s something I’m very excited about and I believe the world is close to having its first true quantum computer,” he says.
Quantum computing could potentially accelerate the ‘biological revolution’ currently taking place within life sciences, so that we can all live not just longer lives but better lives. Jim believes the ‘longevity business’ will change the way we plan our investments, retirements and education and is “the most exciting area for investment on the planet”.
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Throughout his career, Jim has invested in everything from emerging markets to mining, property, biotech and longevity. He has also co-authored a number of books, most notably ‘Wake Up! Survive and Prosper in the Coming Economic Turmoil’ published by John Wiley in 2005.
In this book, Jim cited catalysts for the impending global financial crisis including unsustainable levels of consumer debt in the western world, a US housing crash, highly leveraged derivative financial instruments and governmental fiscal mismanagement.
He holds a master’s degree in Politics, Philosophy and Economics from Oxford University.
Opinions given within this article are the contributors personal views. His views and opinions are effective from the date of publication but may be subject to change without notice. Investec has no affiliation with the companies mentioned in this piece and all research has been independent.