Switching to a passive portfolio

theshortstack

Morning all,

I've just completed my first full year of paying into a S&S ISA and have learned a lot of things from it - primarily that I probably should have taken a more passive route to saving.

That's largely come from the fact that I understand now that I don't have the time to stay up to date with all of the goings on effecting the companies in my portfolio ... and even if I did, I'm not sure I've got the experience/knowledge to buy and sell accordingly.

Therefore, I'm toying with the idea of re-structuring my portfolio so that it only includes passive funds.

I actually feel pretty silly writing this because:

(a) I'd done a fair bit of reading around passive investing before setting up my ISA, but let myself get carried away by investing in a few individual companies to make things more 'exciting'
(b) I'm talking about potentially changing strategy after only a little more than 12 months into a 25+ year saving schedule.
(c)There's also the trading charges that will be included in switching strategy like this (although I've calculated that I'll still be in the black if I do decide to go ahead with this).

Basically I just wanted to get people's thoughts on this as to whether changes so early in my saving diary make any sense ... and if they do, what people would suggest is the best way to make this transition.

Happy to post my portfolio up as it currently stands, if people think it will be relevant.

And thanks in advance for your help...

AlanP_2

theshortstack wrote: »

I actually feel pretty silly writing this because:

(a) I'd done a fair bit of reading around passive investing before setting up my ISA, but let myself get carried away by investing in a few individual companies to make things more 'exciting'

I've managed to avoid this so far, but it isn't easy

(b) I'm talking about potentially changing strategy after only a little more than 12 months into a 25+ year saving schedule.

If you haven't got the time and the knowledge to manage an active portfolio I'd opt out as soon as possible and go for the "easier" passive option.


(c)There's also the trading charges that will be included in switching strategy like this (although I've calculated that I'll still be in the black if I do decide to go ahead with this).

You could lose more though if you aren't managing it.

If you looked into passive investing before then you know where to look for information - on the main S&I forum and the Retirement forums here, monevator.com and the like.

Think about diversification and what funds are available through your current platform. Is your current platform the cheapest / best option if you will be sticking to funds and doing less active trading?

vickssinex

There's nothing to stop you from having both active and passive funds in your portfolio. I've split mine between Vanguard Lifestrategy and an active fund covering small companies. It doesn't take a great deal of effort to monitor and I switched the small companies fund after a couple of years.

masonic

Chopping and changing as you learn when you start investing is fairly normal and to be expected. What happens in the early years really isn't very important if you plan to invest regularly over decades, so if your new understanding is telling you a change in direction is needed, it is probably worth it, even if you later end up making further changes.

kidmugsy

A good source on passive investing is the monevator blog.