Make investing simpler and easier in 2024 - FT中文网
登录×
电子邮件/用户名
密码
记住我
请输入邮箱和密码进行绑定操作:
请输入手机号码,通过短信验证(目前仅支持中国大陆地区的手机号):
请您阅读我们的用户注册协议隐私权保护政策,点击下方按钮即视为您接受。
FT商学院

Make investing simpler and easier in 2024

Weed out the poor performers and declutter your portfolio

Many people enjoy investing, citing it as a rewarding hobby, but others find it a chore and a bore. And even if you’ve been a hobbyist investor for many years, life can throw curveballs in your way.

Investment is a long game during which our level of enthusiasm for money management can wax and wane. My attention to pensions and Isa investments slipped when I had small kids and we moved house five times in three years. I’m sure it won’t be the last time my focus shifts.

Over the festive period, I became part of the “sandwich generation”, supporting parents and children at the same time. In my case it was made more challenging because I live 200 miles away from mum and dad. I’m finding little time for financial admin, aside from pressing issues such as paying the tax bill by January 31.

Other later life transitions, such as a career change or poor health, could also mean there’s no time to monitor performance spreadsheets, keeping up with company results or following financial markets.

But if you don’t spend time on something to do it well, will it all fall apart? Not necessarily, with regards to investing. A series of academic studies have shown that asset allocation accounts for the lion’s share of investment performance, with stock selection and market timing only adding a little extra on top.

Yes, there are rival papers such as “The Equal Importance of Asset Allocation and Active Management” from 2010. Even there, though, James Xiong, Roger Ibbotson and colleagues found about three-quarters of a typical fund’s variation in returns over time comes from general market movement, with the remaining portion split roughly evenly between the specific asset allocation and active management.

But academic papers shouldn’t account for how we live or manage our lives. Nor should we try to be investment portfolio managers in our spare time, when we don’t have any time to spare.

I’m a firm believer that keeping investments simple can bring better overall results with less effort, not least because it can bring non-financial benefits to your life that are impossible to value. This means more time with family or simply less to cross off on the “to-do” list.

So resolve to streamline your investment portfolio. There are plenty of ways to do this.

One is to stop being an “investment clutterbug”. Like the clothes hanging in your wardrobe that don’t fit, there may be some obvious investment things to ditch. Perhaps you have a small share portfolio that runs alongside your larger main pension. If you’ve been lovingly tending a portfolio of small company investments that’s only broken even over 10 years, it’s time to take them to the charity shop.

You could also weed out the poor performers. Two years of a fund underperforming its peers or benchmark index rings alarm bells. Ditch any that have underperformed by 5 per cent or more over a three-year period.

That will leave fewer investments to monitor. But if you want a more radical overhaul, sell everything (watching out for trading costs as you do), and replace with a few low-effort “buy and hold” investments.

When I was a young journalist starting out in 1997 there was a brilliant book called the Armchair Investor by Bernice Cohen and an accompanying Channel 4 show called Mrs Cohen’s Money. Britain’s best-known private investor was female and a former dentist; fancy that! Hers was a cautious, lower-risk, attitude to investing. 

She advised her audience to buy shares in top FTSE companies, reinvest the dividends, then watch them appreciate over decades. As a keen believer in reinvesting dividends to increase the number of shares held in a good, solid company, I’m still a fan today.

However, solid companies can wax and wane — the FTSE 100 turned 40 this month with only 29 of its original members still present. So there’s no harm in letting a few professional fund managers do this for you.

To improve your streamlined portfolio even more, make sure the professionally managed funds you choose are low cost. Even small differences in fees can consume big chunks of your returns over time.

You could pick up a passive fund that accumulates dividends for you such as Vanguard FTSE UK Equity Income Index, with a low charge of 0.14 per cent. However, new research from Morningstar found passive index-tracking equity income funds have “consistently” underperformed their actively managed rivals over the past decade. An issue is that many passives look at historic dividends and do not try to anticipate whether a dividend is sustainable.

You can still make your active UK equity income selections relatively low cost by buying an investment trust such as City of London, with an ongoing charge of 0.37 per cent — and which I own — or Law Debenture at 0.49 per cent.

Having sorted your “home” fund, you’ll also need one that focuses on the global (ex-UK) markets. Vanguard’s FTSE Developed World ex-UK Equity Index Fund would plug the gap neatly, while JPMorgan Global Growth and Income Trust is a decent option that is rivalling passives with its charge of 0.22 per cent.  

You can reduce your risk by adding in a fixed income or “bonds” element. Vanguard’s Investor Questionnaire tool will suggest how much to hold in stocks vs bonds. It has a catch-all Vanguard Global Bond Index GBP Hedged fund or there’s the more expensive actively managed M&G Global Macro Bond Fund instead.

The upshot is your entire investment job can be done with up to five funds. 

The other big task left to do is to consolidate your pensions and Isas, cutting out the stress of admin. You can do this by transferring to a single investment platform, choosing one wisely using a comparison website such as Compareandinvest.co.uk.

You might be able to take advantage of transfer-in deals. Some of the biggest platforms are offering bonuses to new customers bringing in funds and existing customers who add to their investments. These include up to £5,000 for a pension transfer to Interactive Investor, up to £3,500 to Hargreaves Lansdown, plus £500 for transfers to AJ Bell.

Stop checking your investments so often. That will free up time to do more of the things you enjoy, or deal with those curveballs

Moira O’Neill

You probably won’t do all these steps in one go. Just make a start with one. But expect a great sense of wellbeing, akin to that from tidying your shed, emptying the attic or organising a wardrobe. 

With less “money stuff” to think about, you’re also clearing your mind. I’m sure once my tax bill is paid, I’ll feel a whole lot better.

Finally, stop checking your investments so often. That will free up time to do more of the things you enjoy, or deal with those curveballs.

You’ll also lower your risk of a heart attack. Yes, there’s real evidence for this — a Chinese study found stock market volatility is associated with increased risk of hospital admission for cardiovascular disease.

In his book, Thinking, Fast and Slow the economist Daniel Kahneman suggests glancing at your investment portfolio every three months. Anything more frequent may be hazardous to our cognitive function and mental health. Plus, the deliberate avoidance of exposure to short-term outcomes improves the quality of your decisions, meaning you’re more likely to end up richer.

Moira O’Neill is a freelance money and investment writer. X: @MoiraONeill, Instagram @MoiraOnMoney, email: moira.o’neill@ft.com

版权声明:本文版权归FT中文网所有,未经允许任何单位或个人不得转载,复制或以任何其他方式使用本文全部或部分,侵权必究。

比亚迪如何在全球电动汽车竞赛中赶上特斯拉

在迅速缩小与特斯拉的技术差距后,这家中国车企有望在今年实现对这家美国对手的销量反超。

日本迎来对美关系的“时代性重置”

经历与特朗普首个任期的蜜月期后,日本政府如今无法适应特朗普在贸易与防务领域奉行的交易主义策略。

德国国防部长呼吁军火制造商兑现承诺

在前往华盛顿之前,皮斯托瑞斯在接受英国《金融时报》采访时说:“没有理由再抱怨了。”

美国投资者将重启乌克兰关键粮食码头

此前美国投资者与敖德萨商人已就涉嫌贷款欺诈展开了旷日持久的斗争。

Meta案将成为衡量董事会在企业丑闻中责任归属的典型案例

Meta首席执行官扎克伯格和前首席运营官桑德伯格等高管将作为证人出席这场罕见审判。

米莱对强势比索的冒险押注

阿根廷总统希望强势货币能帮助他实现自己以政治声誉为赌注的目标:消灭通胀。
设置字号×
最小
较小
默认
较大
最大
分享×