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Want to make money? Invest like Norway's wealth fund, says author

OSLO (Reuters) - Norway’s sovereign wealth fund has lessons for retail investors according to a book out this week: Think long-term, don’t sell when stocks markets go down and be mindful of your home biases.

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The fund invests revenues from the Nordic country’s oil and gas production in stocks, bonds and property.

Set up as a sovereign wealth fund in 1998, after a first cash injection in 1996 of 1.98 billion crowns ($255 million), the fund has grown into the world’s largest and is now worth $1 trillion, or $197,000 for every Norwegian man, woman and child.

For Clemens Bomsdorf, a financial journalist who has worked for the Wall Street Journal, Die Zeit and Focus, there were lessons that retail investors could learn from.

His book, “How to Become Rich Like Norway: Easy Tips on How to Build a Fortune”, is out in Germany this week with translations into English and Norwegian planned.

“What strikes me ... about the Norwegian wealth fund is that many countries have been rich because of oil. But they have squandered the riches whereas Norway has not,” the 41-year-old told Reuters.

“For the average investor, the fund is a very good blueprint.”

The first lesson is to think long-term, he said. The fund was set up for future generations not to generate cash for every purpose.

“So for retail investors, that means think of putting it away for 15 years at least,” said Bomsdorf.

The fund tends to always buy stocks, even when markets are low. The 2008 financial crisis coincided with a period when the fund was increasing its share of equities in the fund to 60 percent from 40 percent, which in hindsight was an opportunity.

The fund’s worst ever year, 2008, when the fund lost 23.3 percent of its value, was followed by its best, when it returned 25.6 percent in 2009, partly as a result of that move.

But Bomsdorf also said there were things retail investors should not do like the fund, such as its tendency to ignore stocks from emerging markets and small caps.

GRAPHIC: Top 10 sovereign wealth funds -

(This version of the story corrects paragraph 10 to show share of equities raised to 60 percent a decade ago from 40 percent, not 50 percent, previously.)

Editing by Matthew Mpoke Bigg