Passive Investment Strategy Advice

Niksan123

Hey all,

My strategy is based on reading Andrew Hallam's book: the Millionaire Teacher and on the information on Monevator.

I would be happy to diversify further, ie, emerging markets or Asia-Pacific more generally rather than just Japan.

I can afford to hold off investing but I want to make sure that I use up this year's ISA allocation. I am saving for the long term - 10-15 years rather than a quick turnover.

If the FTSE has reached a high and many commentators are suggesting that it will drop 10-20% later this year, does it therefore make sense to wait and dive in when the level has dropped?

Or should I just use excess funds to reduce my mortgage? I have £155,000 left on a £310,000 property with a current rate of 2.99% fixed until October.

Thanks again.

dunstonh

My strategy is based on reading Andrew Hallam's book: the Millionaire Teacher and on the information on Monevator.

I havent read the book. However, it does seem strange that it would suggest you pick and choose sectors when the normal diversification model is that picking and choosing doesnt work and that having an effective amount in each area is the best option.

If the FTSE has reached a high and many commentators are suggesting that it will drop 10-20% later this year, does it therefore make sense to wait and dive in when the level has dropped?

It hasnt reached a high. And "commentators" cannot predict anything that will happen when they say it does.

The only thing you know when you invest is that it will go down as well as up. You dont know when or by how much or at what frequency. Just that it will happen. It could drop 10% and recover within days or weeks, months or years. Trying to time a drop is futile. We could have a repeat of the period a decade ago which saw nearly 5 years of near continuous growth without any significant drops. People were predicting drops each year during that period. Like a broken clock, they will be right sometimes but not through skill but by pure luck. What if the 10% drop comes after a 20% gain?

When you invest, you are better to accept that there will be volatility and know that you can't time it. That doesnt mean you can't perhaps reduce your risk after a growth period or perhaps take a little more risk after a negative period. However, your knowledge and acceptance of such, along with timescale and, importantly, your objectives and capacity for loss would have a lot to do with that.

bigfreddiel

Niksan123 wrote: »

UK Bonds (30%): UK FTSE (30%): US (20%): Japan (20%)

I will then look to put in £1000 per month to rebalance the ratios.

My main concern is that the FTSE is at such a high level. Am I better off waiting (in the hope that the FTSE drops) or jumping in now?

well done, passive investing is the way to goforyour core or eentire portfolio

mine is 50/50 equities/bonds & gilts

i use etf's, four in total, an all world equity etf, cotoro bond, gilt and index linked bond - no platform fees, no stamp duty, only a £12-50 dealing cost - ongomg costs about 0.2%

I rebalance once a year - and it involves only four transactions

I looked at diversifying my equity chunk but at the end of the day decided it was not worthwhile

I also back tested various mixes of funds and etfs using historical data from yahoo and google finance and then creating a portfolio on the investors chronicle web using that data - very easy and quik to do

dont time the market - just get in now - passive investing is for the long term - this high point (actually not so high taking inflation into account sine the last high in 2000) will look like a tiny pimple in 10 years time - just look back to 1987 - that crash is barely visible

good luck

fj