For anybody starting investing today, for the long term, here are some model portfolios that I suggest will set somebody up very effectively and should beat the equivalent master portfolios from e.g. Hargreaves Lansdown or ii.
These ready-made master portfolios are all:
Based on low price index trackers from market leading Exchange Traded Fund (ETF) providers. Each master portfolio costs, on average, less than 0.20% a year – plus your platform charges. In contrast, the master portfolios at HL will cost you over 1% a year, and expose you to ‘Woodford risk’. Higher fees will, in the long run, result in worse performance.
Very simple to set up, with no more than holdings. This means they can be run efficiently with as little as £5k initial investment. Each model portfolio’s funds contains many hundreds of individual company’s shares/bonds – giving excellent diversification.
‘Work anywhere‘ – you can buy these ETFs on all leading platforms and stockbroking sites.
Moreover, with just 3 clicks or less you can choose a master portfolio that suits your style, is tailored to your geographic preference, and is sustainable/ESG if you prefer. All these portfolios are suitable for pensions (via a SIPP), ISAs or a general investment account.
The Black Live Matter protests are shining a light on racism, and police brutality. Which both feel quite a long way from the topic of this blog. But as I reflect on them I realise that I have never really discussed any ‘purpose/values’ driven investing. So here goes.
I notice my age increasingly frequently these days, especially at work – where I am almost the oldest person in a young, dynamic, London workforce.
Where I am aligned with my workforce is that we are all, by the main, modern, liberal, decent Londoners. I don’t believe anybody I work with is a racist, or a sexist, or somebody who would wilfully harm the environment.
Nonetheless, my younger colleagues definitely differ from me in how they put values front and centre; they crave a ‘purpose’, and they embrace their purpose/values in much more of what they do. So, for instance, to the extent they manage their investments they would be much more likely, I think, than my peers to look for ‘socially responsible’ investing – or Environmental/Social/Governance (ESG) investing.
Why ‘socially responsible investing’ never appealed to me
When I started my investment journey, over twenty years ago, any ‘environmental’/similar investing was, to put it charitably, a niche sport. The range of investments was very limited, and it was assumed that the returns would be mediocre. Fees were high. I was not attracted to it.