This document provides an introduction to investing and discusses several key concepts: 1) It is impossible to consistently predict when markets will rise and fall, so the best strategy is to invest regularly over time through ups and downs to benefit from pound cost averaging. 2) While it is difficult to determine if markets are cheap or expensive, standard valuation metrics like the price-to-earnings ratio can provide some guidance. 3) All investments carry risk, and higher potential returns generally require taking on more risk. It is important to understand the risks and reduce risk exposure when markets are highly valued.

1. How to become a successful investor
INTRODUCTION
TO
INVESTING

2. Contents
3 About Infinity
About Bestinvest
4 Introduction
What makes markets move?
Regular saving
How can we tell if shares are cheap?
5 Understanding the risks
6 How can you measure risk?
7 Importance of asset allocation
Regular rebalancing
8 The world is your oyster
Fashion and style
9 The benefits of collective funds
Active versus passive
10 Selecting fund managers
11 Bonds
12 Investing in property
13 Alternatives
14 Important information
INTRODUCTION TO
INVESTING

3. About Bestinvest
Founded in 1986, Bestinvest has
grown to become a leading private client
investment adviser, looking after over
£4 billion of assets for more than 50,000
clients. We offer a range of investment
services all of which are underpinned by
rigorous research aimed at identifying
those fund managers we believe will
deliver long-term outperformance.
Bestinvest has won numerous awards
including UK Wealth Manager of the
Year 2011 as voted by readers of the
FinancialTimes and Investors Chronicle.
We have also been voted Best Discretionary
Manager 2011 by Money Marketing and
Investment Adviser of the Year 2012 at
the Professional Adviser Awards.
Headquartered in Mayfair, London,
Bestinvest has 14 regional offices with
200 staff. The company is one of the
fastest-growing investment advisory
firms and is proud to support the NSPCC.
About Infinity
Infinity Financial Solutions is a leading
provider of expat financial services across
Asia with offices in Malaysia, Hong Kong,
China, Cambodia and Vietnam. It is our
fundamental belief that financial planning
makes life better and we are dedicated to
providing exceptional service to both our
individual and corporate clients.
The combination of carefully tailored
financial planning and a wide range
of options is at the heart of what
makes Infinity different from other
financial advisers. We’re completely
independent, so the advice we give is
impartial and unbiased.
We’re here to protect, build and maximise
your wealth for the future security of
you and your family. But most of all, we
want to help you achieve your hopes and
objectives, whatever they may be. The
possibilities are endless.
BEST XXX XXX XXXXXX XXXX
WINNER
BESTINVEST
BESTWEALTHMANAGERFORINVESTMENTS BEST XXX XXX XXXXXX XXXX
WINNER
BESTINVEST
UKWEALTHMANAGEROFTHEYEAR
2011
Best Discretionary
Adviser
2012
Investment Adviser
of the Year
3INTRODUCTION TO INVESTING

4. What makes markets move?
The value of most investments fluctuates
in a largely unpredictable manner. This is
always disconcerting for investors and
can be expensive if it leads to a knee
jerk reaction to sell when values are
depressed. The first point to make is that
markets already discount what is currently
known and expected. You’ll often see
the shares of a company fall after it has
delivered strong growth in profits, simply
because the market had been anticipating
even more. Likewise, the declaration of
huge losses can, sometimes, represent a
buying opportunity as all of the bad news
is already discounted.
So how can we predict when shares,
or any other investment, will go up
and down? The simple answer is that
this is impossible with any consistency,
especially in the case of large companies
whose shares are researched intensively
on a continuous basis by investment
banks, stockbrokers and fund managers.
The economic cycle has some impact on
overall market prices but not in a way
that lends itself to reliable forecasts. You
might think that over the long term it
must make sense to invest in those coun-
tries that will achieve the highest rates of
economic growth but intriguingly there
is no evidence that this works, even if
you are clever enough to identify the
fastest growers accurately (economists
are very poor at doing this). Indeed,
some academic research suggests that
the opposite may be true and you will
actually make more money by backing
the slow-growth economies.1
Regular saving
One way in which you can use market
movements to your advantage is by
making regular contributions to your
investments so that you buy when the
markets have down periods as well as
during the up periods.
This allows you to benefit from a
phenomenon called “Pound Cost
Averaging” which means that you
smooth out some of the risks of
getting the timing wrong and your
money works harder when values
are depressed. Setting up a regular
investment scheme is a good discipline,
which results in you keeping on investing
through the ups and downs and reduces
the chances that you will get carried away
by the prevailing sentiment.
How can we tell if shares
are cheap?
If we can’t predict the timing of market
cycles, can we work out if markets are
cheap or expensive? This would be very
useful because there is plenty of evidence
that suggests you make much more
money if you buy when shares are cheap.
The standard measure for valuing shares
is the Price/Earnings ratio (P/E) which
is the multiple of the market value of a
company to its underlying profits after
tax. If the P/E is 15 then in effect the
company is valued at 15 years of current
earnings. In broad historical terms if the
P/E on the overall market is over 20 then
shares are likely to be expensive and
if less than 10 they are probably cheap.
However, nothing is that simple with
investing. Company profits change all
the time and there can be periods when
they are very depressed, or very high
compared to ‘‘normal’’ levels. One way of
accounting for this is to calculate the P/E
on the basis of the average profits over
a period of 10 years and this is called
Cyclically Adjusted P/E (or ‘CAPE’).
1
Triumph of the Optimists by Dimson, Marsh & Staunton
In this guide we try to give you
a few pointers on how to be a
successful investor. For most
of us the future performance
of our investments will have a
huge impact on our standard
of living later in life.
Understanding how to get the best results
is vital and unless you are willing to let
someone else make all the decisions for
you this means you need to be familiar
with the basics. Investing is a strange
world where the usual rules don’t seem
to apply. If the price of a car or television
falls we probably feel more tempted to
buy it.
With investments the opposite happens –
private investors often buy just when
caution is needed after a steep rise and
sell heavily when markets slide
downwards. This stems from a tendency
to follow the crowd and seek safety in
numbers when we are uncertain or feel
limited in our knowledge. It is also
difficult to ever know for sure if markets
are cheap or expensive; there will always
be compelling arguments both ways.
4 INTRODUCTION TO INVESTING

5. Understanding the risks
It’s a fundamental law of investment that
you have to take more risk in order to
have the potential for higher returns.
However, it’s important to understand
that taking extra risk certainly does not
guarantee higher returns (if it did then it
wouldn’t be risky!). The following chart
gives an impression of how the potential
for higher returns increases as you take
more risk – but so does the potential
for losses.
It stands to reason that risks must be
greater when investments are highly
priced than when they are cheap. So you
should reduce the amount of risk when
markets are high but unfortunately many
investors do exactly the opposite and pile
in. After a period of strong market rises
it’s easy to believe that the good times
will roll on forever and that nothing can
ever go wrong. Likewise, when markets
become very cheap there will appear to
be no prospect of them ever recovering.
It takes courage to invest at this point but
history suggests that it will eventually be
well rewarded.
After you have invested it’s quite possible
that prices could fall so that you would
have a loss if you sold immediately. This is
always depressing but don’t feel any
guilt about it.
As we said earlier, no one can predict
the timing of market cycles with any
consistency and what really matters is the
return you make over the period when
you need to cash in the investment. If
you are still in that period of your life
when you will be investing more money
then you can cheer yourself up with the
thought that your next purchases will be
made at even better valuations.
Maximum and minimum annual returns 1991-2011
%
-40
-30
-20
-10
0
10
20
30
40
Equities75% cash,
25% equities
50% cash,
50% equities
25% cash,
75% equities
Cash
Source: Lipper for Investment Management
5INTRODUCTION TO INVESTINGAll investments carry risks. Please see Important Information on page 14 for detailed information.

6. How can you measure risk?
Since risk is such a fundamental part of
the investment world, can we measure
it accurately? ‘No’ is unfortunately the
answer because we can’t predict the
future. We do know that the main
determinant of risk in most portfolios
is the amount invested in equities (also
known as shares) as these fluctuate more
than most other types of investment but
even this statement needs a caveat.
One of the biggest risks facing long-
term investors is inflation. A portfolio
consisting wholly of government bonds
may have little investment risk (although
in these uncertain times that’s less true
than in the past) but it will be very
susceptible to any increase in inflation,
so it’s not really low risk at all.
Many academics and professionals use
volatility as a measure of risk. This is a
statistical term that measures how much
an individual investment or a portfolio of
investments fluctuates in value. This is a
useful concept but it is not guaranteed to
be a reliable predictor of the future as it
is a backwards looking measure that has
an unfortunate tendency to understate
risk at critical moments in time, such as
in the summer of 2007. So it needs to be
treated with caution. However, it can help
to show how your portfolio compares
with others and with benchmarks such
as the FTSE 100 index. At Bestinvest we
regularly review the volatility of client
portfolios to help monitor risk.
6 INTRODUCTION TO INVESTING

7. Importance of asset allocation
Once you start to accumulate a number
of investments the chances are that
these will be of different types. Some
will be equities, some bonds, perhaps
some property and also some of
the more esoteric assets such as
commodities (eg gold and oil), hedge
funds and private equity. This mix is
called asset allocation and academic
research suggests that it is responsible
for 90% of the differences in investment
returns2
. So it’s worth putting in some
effort to get this right.
As we said earlier, most investments
fluctuate in value. However, they don’t
all fluctuate in the same way. There will
be times when equities are rising while
bonds and property are falling. Good asset
allocation uses this lack of correlation
between asset classes to achieve a higher
return for a given level of volatility.
Regular rebalancing
Rebalancing means bringing your
investment portfolio back to its original
asset allocation. It may have become
out of kilter because, over time, some
investments can grow faster than others.
It’s useful to rebalance regularly (annually
is about right) and, in effect, it makes you
sell equities when they are overvalued and
buy them when they are cheap.
0
20
40
60
80
100
120
140
160
Sept 02 Sept 04 Sept 08 Sept 10 Sept 12
Diversified portfolios can lower risk whilst still achieving attractive returns
Bonds (FTSE A British Govt All Stocks TR)
Source: EPFR, Credit Suisse research
Portfolio (60% Equities, 30% Bonds, 10% Property)
Property (IPD UK All Property Monthly TR)
Equities (FTSE All-Share TR)
%
INCREASE
7INTRODUCTION TO INVESTINGAll investments carry risks. Please see Important Information on page 14 for detailed information.
2
Source: Brinson, Hood & Beebower (1986); Ibbotson & Kaplan (2000)

8. The world is your oyster
UK stock exchange listed companies
represent around 10% of global stock
markets, so it simply doesn’t make sense
to restrict your choice of investments to
the UK market alone. These days it’s
easy to invest internationally – there are
thousands of funds available covering
most of the overseas markets. Where
should these fit in to your portfolio?
Everyone expects the Asian economies
to achieve higher growth than the West
for the foreseeable future but as we
discussed earlier this probably has no
bearing on the performance of their stock
markets and, in any case, economists are
not very good at forecasting growth.
Generally it makes sense to invest as
widely as possible – this will deliver
some diversification benefits and also
allow exposure to the full range of
investment opportunities.
Fashion and style
There are many different ways of
investing successfully. Some people
try to find shares that have fallen out of
favour and the market appears to have
undervalued their prospects. A few years
ago WM Morrison was a good example of
this when it seemed to be struggling after
acquiring Safeway. Others prefer to
invest in companies that are growing fast.
Even though these shares often appear
expensive they could still be very profitable
for investors if the growth continues.
Companies such as Amazon and Google
would be good examples of this. There
is not a ‘right’ or ‘wrong’ approach here,
although history suggests that ‘‘value’’
investors, who focus on picking companies
that have been ignored by the wider
market in the belief their value will
eventually be recognised, have the odds
more on their side. Legendary investor
Warren Buffet is the most well-known
adherent of value investing. What you
will see are periods when a particular
style seems to be doing very well while
others will be out of favour. It’s tempting
then to switch away from the managers
who are doing badly and jump on the
bandwagon but this is unlikely to be a
successful approach compared to investing
with a mix of managers who pursue
different strategies.
8 INTRODUCTION TO INVESTING

9. The benefits of collective funds
Unless you have a personal interest in
shares and are prepared to allocate a
large amount of your time to researching
and monitoring them, it will usually make
sense to invest via a collective vehicle
(or fund) where your money is pooled
together with others and invested on
your behalf in a number of individual
investments. Popular types of funds
include OEICs (open-ended investment
companies), unit trusts, Investment Trusts
or Exchange Traded Funds (ETFs). Each of
these will provide you with exposure to a
diversified portfolio.
Active versus passive
Do you want to select an actively managed
fund that employs a manager to try and
beat the market by picking stocks or
sectors they believe will perform best, or
a passive vehicle that should deliver you
with index returns before costs?
Opinions vary on the merits of each.
What is indisputable is that many active
managers do not manage to beat their
benchmarks over long periods of time
and this is even more difficult in the most
highly researched areas such as large-cap
US equities. If you are going to invest
in actively managed funds then it is
important to be super selective.
Passive investment will provide performance
that is similar to the index or market as a
whole – though these funds will slightly
underperform because they also have
charges. Some index funds are much too
expensive in our view. If you decide to
use ETFs (passive vehicles listed on stock
exchanges) then be careful about those
that use derivatives rather than actually
buying the underlying shares. These
are called synthetic ETFs and carry an
additional risk of a default by the
provider of the derivatives – usually
an investment bank.
9INTRODUCTION TO INVESTINGAll investments carry risks. Please see Important Information on page 14 for detailed information.

10. Selecting fund managers
If you go down the active route you
must be very selective as the difference
between the best and worst performance
can be dramatic: only best of breed
managers can justify the higher costs
versus passives. Fund manager selection
is a highly complex matter. The most
obvious approach might appear to be to
choose those funds that have performed
best in the past from a comparison table
but there is overwhelming evidence
that this approach does not work. That’s
mainly because it’s hard to separate out
luck from skill. If you held a contest to
find the best person at tossing a coin 10
times to get an outcome of heads and
attracted 1,000 people, the chances are
that one person would achieve 10 heads.
If he or she was a fund manager they
would be judged a genius and be winning
awards. Consistency of performance over
long time periods is an important factor
when selecting an actively managed fund
but it takes many, many years for the luck
element to diminish.
Therefore most analysis of fund managers
focuses more on qualitative factors, such
as trying to assess how they make
decisions and what gives them an edge
over the rest of the market. Bestinvest
has been assessing fund managers for
more than 20 years and has developed a
number of proprietary techniques to help
pick the sheep from the goats. Overall
this has helped our clients to perform
better than most but please be aware
that successful investment is about
playing percentages. There are no
certainties and there will always be
periods when even the very best
managers struggle to make money.
Some fund managers have very distinctive
styles. Some may have a history of doing
relatively well when markets are falling,
others have the opposite characteristic.
When putting funds together in a portfolio
it’s usually a good idea to have a mixture
of styles, otherwise you will have to
endure poor performance during some
market conditions.
10 INTRODUCTION TO INVESTING

11. Bonds
Bonds are essentially “IOU” notes
allowing governments and companies
to borrow for relatively long periods
of time during which they will pay interest
(known as the ‘‘coupon’’) to the bond-
holders. Bonds should form a part of most
portfolios as a means of diversifying the
risk from equities. The most straightfor-
ward bonds are fixed interest gilts issued
by Governments. These offer a predefined
rate of return over a fixed life which can
range from a few months to many
decades. The longer the duration, the high-
er the yield (in most market conditions) but
with the higher yield comes much more
volatility in capital value.
You can also invest in a type of bond
known as index-linked bonds, which offer
protection from inflation. This is a very
attractive feature and as a result these
bonds are valued very highly.
Bonds are also issued by companies
(‘‘corporate bonds’’) and various other
bodies. These bonds tend to be of a
shorter duration than most gilts and their
behaviour is influenced by the market’s
perception of the riskiness of the borrower
and interest rates generally. The bonds
issued by companies with the strongest
financial health and a high credit rating
are known as investment grade. High
yield bonds, which used to sometimes be
referred to in the US as ‘‘junk bonds’’, are
those issued by companies that are not
considered to be investment grade and
these tend to behave more like equities.
It’s usual to access these types of bonds
through a fund. This will provide the ben-
efit of professional management to make
the selections and will diversify the risk
from any defaults. A default is the risk
that the company will miss a payment,
or not be able to fully pay back the loan
at the end.
11INTRODUCTION TO INVESTINGAll investments carry risks. Please see Important Information on page 14 for detailed information.

12. Investing in property
Commercial property – such as office
blocks, shopping centres and warehouses
– has a number of attractions for investors:
long leases with high quality tenants should
provide good security for rental income
and over the long term commercial
property should protect against inflation.
On the downside it is very illiquid, hard to
value accurately and transaction charges for
buying and selling buildings are very high
(at least 6%). This means that all of the
vehicles used for investing in property
have some serious downsides.
Real Estate Investment Trusts (REITs) are
companies listed on the stock market that
invest in property. The price of their shares
therefore fluctuates on a daily basis. This
means that they perform most of the time
in a similar way to other shares, reflecting
the ebbs and flows of investor sentiment.
However, in the long run they should
reflect the performance of the underlying
property portfolio.
Some property funds have an open-ended
structure so the price is always loosely
linked to the underlying asset value.
However, it can oscillate by more than
6% from day to day simply depending on
whether there are net buyers or sellers of
the fund. To provide liquidity for any sellers
the fund has to hold a reasonable level of
cash, which acts as a drag on long-term
returns. At times this cash proportion can
rise sharply owing to the delays involved in
completing new purchases.
12 INTRODUCTION TO INVESTING

13. Alternatives – hedge funds,
private equity and commodities
Over the last two decades the asset
allocation of many professionally
managed portfolios has widened beyond
equities, bonds and property to include
more esoteric strategies. Bestinvest has
been at the forefront of this approach
since it offers the prospect of potentially
higher returns for a given level of risk but
only on a highly selective basis.
The term hedge fund now covers such a
wide range of investment strategies that it
is virtually meaningless. However, for the
purposes of this document we will take it
to mean funds that employ a much wider
range of trading strategies, designed to
achieve positive returns when markets
fall as well as when they rise. These are
often called Absolute Return funds. Many
of these were extremely successful in the
past but in more recent years the picture
is much more mixed: during the 2008
credit crisis, the average hedge fund lost
19%. Not only have hedge funds overall
failed to deliver very attractive returns,
they also now seem to be quite closely
correlated to other markets.
Private equity refers to investments in
companies that are privately owned and
whose shares are not publicly traded on
stock exchanges. This can encompass
quite large firms, which are backed by
private equity finance as well as venture
capital which generally targets smaller,
younger businesses. As these types of
investments are illiquid, it is normal for
private equity firms to become involved in
the development of the businesses, usually
through representation on the Boards.
Commodities is another broad asset
class that really includes a number of
underlying physical substances with
very different characteristics, such as
precious metals, minerals, base materials
and agricultural crops. Gold is primarily
seen as a hedge against the debasement
of paper currencies. Oil and industrial
metals are mainly sensitive to changes to
supply and economic activity, while soft
commodities such as wheat and orange
juice are influenced by climate. However,
the common characteristic among them is
that they provide no underlying income
return, indeed there is generally a cost
attached to ownership (for example
storage or insurance etc). So all of the
return needs to be generated by increases
in value as there is no income.
13INTRODUCTION TO INVESTINGAll investments carry risks. Please see Important Information on page 14 for detailed information.

14. Important information
Please remember the value of all
investments can go up as well as down.
This introduction to investing does not
constitute personal advice and if you
are in any doubt as to the suitability of
an investment please contact one of our
advisers. All investments carry risks but
we would point out the following:
Funds
Different investments carry varying levels
of risk depending on the geographical
region and industry sector to which they
are exposed. You should make yourself
aware of these specific risks prior to
investing The value of all investments and
the income from them can go down as
well as up, and you can get back less than
you originally invested. Past performance
or any yields quoted should not be considered
reliable indicators of future returns.
Bonds
Bonds issued by major governments and
companies are generally considered more
stable than those issued by emerging
markets or smaller corporate issuers;
in the event of an issuer experiencing
financial difficulty, there may be a risk
to some or all of the capital invested.
Absolute return funds
Investors should be aware that Absolute
Return funds do not guarantee a positive
return and you could get back less than
you invested, as with any other
investment. Additionally, the underlying
assets of these funds generally use
complex hedging techniques through the
use of derivative products, which can
carry additional risks which may not be
immediately apparent.
Commodities
Funds which invest in specific sectors may
carry more risk than those spread across
a number of different sectors. In particular,
gold, technology and other focused funds
can suffer as the underlying stocks can be
more volatile and less liquid.
Property funds
The property market can be illiquid;
consequently, there can be times when
investors will be unable to sell their
holdings. Property valuations are
subjective and a matter of judgement.
Specialist funds
Due to their nature, specialist funds can
be subject to specific sector risks. Investors
should ensure they read all relevant
information in order to understand the
nature of such investments and the
specific risks involved.
14 INTRODUCTION TO INVESTING

16. Bestinvest
6 Chesterfield Gardens
London W1J 5BQ
Bestinvest (Brokers) Limited (Reg. No. 2830297) and Bestinvest (Consultants) Limited (Reg. No. 1550116)
are both registered in England and are authorised and regulated by the Financial Services Authority.
Registered office: 6 Chesterfield Gardens, Mayfair, London W1J 5BQ. 201212-2723
Call: Malaysia +60 3 2164 6585
Email: info@infinitysolutions.com
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