What is Evidence-based Investing?

Evidence-based investing is an investment strategy that relies on scientific research and data to guide investment decisions. This approach is based on the idea that, over the long term, financial markets are efficient and that it's difficult to consistently beat the market through active stock picking or market timing.

Instead of trying to predict the future or chase hot stocks, evidence-based investors focus on building diversified portfolios based on sound investment principles that are backed by empirical evidence.

This typically involves investing in low-cost index funds or ETFs that track broad market indexes, such as the S&P 500, rather than trying to beat the market through active management.

What is the benefit of Evidence-based Investing?

By focusing on evidence-based investing, investors can benefit from the power of compounding over the long term while reducing the risks of market timing and emotional decision-making. This approach also helps investors avoid the high fees and hidden costs associated with active management and trading.

At its core, evidence-based investing is about making informed, data-driven decisions that are grounded in sound investment principles. By doing so, investors can build a solid foundation for their financial future and achieve their long-term financial goals.

Does Timeline use Evidence-based Investing?

Timeline's investment process is guided by a hundred years of empirical data, decades of academic research by renowned economists and the practices of leading institutional investors.

Timeline Portfolios uses evidence-based investing to construct and manage their investment portfolios. They base their investment decisions on scientific research and empirical evidence, rather than trying to predict market trends or chase individual stocks.

Timeline constructs their portfolios using a mix of low-cost index funds and ETFs, with a focus on broad diversification across asset classes and geographies. They also use advanced portfolio optimisation techniques to maximise returns while minimising risks, taking into account factors such as volatility, liquidity, and tax efficiency.

In addition, Timeline emphasises the importance of long-term investing and the benefits of compounding over time. They offer a range of portfolios with different risk levels and investment goals, and they use regular rebalancing to maintain optimal asset allocations.

Next steps:

If you are a Financial Adviser, contact Timeline to find out more about how we can help you.

If you are a consumer interested in this subject, watch video interviews about Evidence Based Investing at The Investing Show, sponsored by Timeline.