If you’re anything like most investors, both these things will be true: You spend almost 100x as much time watching TV than you do on your household finances, and You’d rather sit in rush-hour traffic than rebalance your portfolio. Source: A Wealth of Common Sense You may also believe that real estate is likely to …
Hands up those of you who bought growth stocks in the recent selloff. OK, my hand’s up too. I know this is a blog about index investing, but let’s be honest – we all love a good punt. Netflix at 75% off its highs was just too much for me. I did absolutely zero research. …
People hire financial advisers for all sorts of reasons. They can sort out your tax planning, estate planning, retirement planning, and all kinds of other good stuff. Every financial adviser will provide services designed to add value to your wider financial life, outside of what goes into your investment portfolio. If a financial adviser helps …
My last post told the story of how I was recently contacted by a sophisticated investor, who was wondering how they should be applying Modern Portfolio Theory to their portfolio. That post gave a quick introduction to what Modern Portfolio Theory is, and how MVO can be used to apply it to portfolios. In summary, …
I was recently contacted by a sophisticated investor who asked how I’d apply Modern Portfolio Theory (MPT) to their asset allocation process. They already had an MPT framework in place, and wanted to know how to improve it. I thought it was an interesting question, so spent far longer than I should have done consulting …
Following on from my article on ‘The best investing books for beginners’, I’ve compiled a list of what I consider to be the best investing blogs below. The blogs are listed alphabetically. There’s a mix of UK-specific blogs and US-focussed blogs – but I’ve made sure that the US blogs in the list are equally …
My last post was all about why you should consider crafting an Investment Policy Statement (IPS). Here, I’ll show you how to create an IPS, and share my own. I’m sharing mine in the hopes it might prove a useful starting point for those readers looking to create their own. I remember I found it …
People have been creating investment plans for a long time. It looks like the first on record dates back roughly 4,000 years ago, and was created by an ancient Sumerian wanting to figure out how much milk and cheese his cows would produce over the next ten years. It forecasts the growth of a herd …
With the ISA deadline having just passed, I’ve been getting more than a few ISA-related questions coming into my inbox. So I thought I’d put together a couple of posts along that theme. Next week’s post will be a collection of ISA FAQs, but this week I thought it might be interesting to see how …
In my free time, I like to kick back and relax by reading books with titles like ‘All about Asset Allocation’ and ‘The Intelligent Asset Allocator’. Unsurprisingly, based on their titles, most people would prefer to watch their company’s compliance training videos – the ultimate test of anyone’s boredom threshold – than read these things. …
When I began my investing career, I was pretty ambivalent towards the use of corporate bonds in portfolios. They seemed like the investing equivalent of Stephen Root – nobody really loves him, nobody really hates him, he’s always just kind of… there. Then, as time went on, I became less and less certain they were …
This post explores the average UK savings by age groups. It also looks at the average amounts in UK pension accounts, and the average UK net worth by age. I’ve included links to the source data, and included my own highlights below each chart. All data is taken from the Office of National Statistics (ONS), …
We’ve made it! This is the final post in the series on duration matching. Before we conclude, let me explain what we’ve seen so far. No, there is too much. Let me sum up. — Duration matching makes it possible to eliminate interest rate risk in your bond portfolio by matching the duration of your …
This is the fourth post in a series on duration matching. The first post covered an introduction to duration, what duration matching is, and why we might want to use it. The second post looked at why we shouldn’t be afraid of using long-duration bonds, especially if we also have a long-term investment horizon. …
This is the third post in a series on duration matching. The first post covered an introduction to duration, what duration matching is, and why we might want to use it. The second post looked at why we shouldn’t be afraid of using long-duration bonds, especially if we also have a long-term investment horizon. …
This is the second post in a series on duration matching. The first post covered an introduction to duration, what duration matching is, and why we might want to use it. The key idea of duration matching is that we can eliminate interest rate risk by matching our bonds’ duration to our investment horizon. If …
Much of what I remember from my investment exams is now occluded by the mists of time. Just like all other exams, you remember the bits you use in your day job, and almost instantly forget the other 90%. Included in that hazy 90% is a concept known as asset-liability matching. The idea behind asset-liability …
Every now and then it’s interesting to see where the UK’s at with its finances. So I thought I’d use this week’s post to see how the average UK pension pots are looking. And I found it pretty surprising. I was not only shocked by the average size of pension pots, but also how many …
How much can you expect to make on your investments over the next 10 years? Just like last year’s edition, this post aims to answer the question of what sorts of returns UK-based investors can expect over the next decade. I’ve collected 10-year equity return forecasts from as many (reliable) sources as I could find …
We’re in a weird period for bonds right now. Interest rates are at all-time lows, bond yields are at all-time lows, and it’s looking more and more likely we may have to deal with a positive stock/bond correlation at some point soon. So should we still be investing in them? The purpose of bonds is …
“When stocks go down, bonds go up” has been a foundational assumption in just about everyone’s portfolio construction decisions for the last 20 years. But it might be about to break down. There are no ‘laws’ in investing, because nothing is ever provable and there can be no counterfactuals. But the negative stock/bond correlation feels …
Is the stock/bond correlation about to turn positive? Read More »
Hello again, it’s been a while. I won’t bore you with the details of why I’ve taken a few months off, but I’m now out of hibernation and ready to dive back into the world of investing. During my time off, my inbox filled up with questions. Alongside the usual requests for sponsored posts, advertising …
For those who read my last post, you now know you can throw all that textbook investing stuff out the window and go all-in on buying Pokémon cards and dinosaur fossils. The last post looked at what the rebalancing bonus is, and how best to capture it. But now we come to the meatier part …
For my next post, I’m planning on having a look at how often you should rebalance your portfolio. i.e. how often you should buy or sell your investments to bring them back to your target weights. But as I was writing, I realised before we can figure out the answer, we first need to understand …
Choosing the right broker is one of the essential steps on the road to managing your own investments. It can also be a tricky one. Firstly, there’s the matter of costs. Everyone has a different portfolio, with differing levels of trading, in different tax wrappers. So finding the cheapest broker will be dependent on your …
