Buy a low-cost index fund

The quick­est, eas­i­est and cheap­est way for most investors to get bet­ter returns than a sav­ings account. An index fund buys a bas­ket of stocks mapped to pre-deter­mined con­di­tions — you set it and large­ly for­get it.

• Tar­get return: ~10% per year on aver­age
• Keep fees as low as pos­si­ble — even 1% in annu­al fees com­pounds into a sig­nif­i­cant drag over decades
• In Aus­tralia, AFI (Aus­tralian Foun­da­tion Invest­ment Com­pa­ny) is a well-regard­ed list­ed invest­ment com­pa­ny worth look­ing at
• Requires almost no ongo­ing time com­mit­ment

Build your own index fund

If you want a lit­tle more con­trol and are will­ing to do a lit­tle more work, you can put togeth­er your own index fund rather than pay­ing some­one else to man­age one.

• Buy shares in the top 20 stocks on the ASX in ratios equiv­a­lent to their mar­ket cap
• You only pay bro­ker­age — no ongo­ing man­age­ment fees eat­ing into your returns
• Re-eval­u­ate the list once or twice a year and rebal­ance accord­ing­ly
• Still rel­a­tive­ly pas­sive, but you’re in direct con­trol of what you own

Buy only the most undervalued top-20 stock

A step up from Lev­el 2. Instead of buy­ing all 20, you do a quick val­u­a­tion of each and put your mon­ey into whichev­er one is most under­val­ued rel­a­tive to its intrin­sic val­ue.

• Cal­cu­late Intrin­sic Val­ue #2 (IV#2) for each of the top 20 stocks — see the Check­list Walk­through for how
• Buy only the stock with the biggest gap between IV#2 and its cur­rent mar­ket price
• Con­cen­trate your posi­tion in the sin­gle best oppor­tu­ni­ty rather than spread­ing even­ly
• Re-eval­u­ate when­ev­er you have new funds to deploy, or when the cur­rent hold­ing dete­ri­o­rates

Run the QAV system

This is what we teach on the pod­cast and what all of these resources are designed to help you do. QAV — Qual­i­ty At Val­ue — is the sys­tem Tony has devel­oped over 30 years and refined through his own invest­ing. It’s a dis­til­la­tion of every­thing he’s read and stud­ied com­bined with his own exper­i­men­ta­tion.

The QAV sys­tem revolves around a check­list of 17 data points that eval­u­ates each stock on qual­i­ty, val­ue, and mar­ket sen­ti­ment. Every stock gets a score. You buy the high­est-scor­ing stocks that are trad­ing below their intrin­sic val­ue, and you hold them until the sys­tem tells you to sell.

• Tony’s aver­age return: approx­i­mate­ly dou­ble the mar­ket over 30+ years
• Once you’ve learned the sys­tem, it takes rough­ly 1–2 hours per month to run
• You buy the num­bers, not the sto­ry — no hot tips, no fore­casts, no guess­work
• Works in bull mar­kets, bear mar­kets, and every­thing in between