New to investing - Robbins Money - Master The Game - How to apply in the UK?

Louise199

Hello I am Louise and just looking out to start some long term investing.

Out of desperation I bought "Tony Robbins - Money - Master the Game" I understand he isn't known for being an investment guru but I knew this book would serve as an easy introduction for the complete beginner like me. I also liked the idea the most of the content was gleaned from actual investment guru's.

I am not here to review the book but it was LONG and lots of motivational fluff - however it did serve it's purpose… For Americans!

The fact I finished the book is a miracle and so I want to do it justice, I really want to take the advice and apply it in the UK Stock Market - I would really love it if anyone could offer any advice at all

OK so:

I've opened an account with Hargreaves Lansdown for a mixture of low fee's and user friendliness (it came up on this website as a recommendation and also a couple of other searches I made) I understand fee's are REALLY important even if they sound low they can kill your gains

Next the portfolio split that's recommended is:

7.5% Gold
7.5% Commodities
30% Stock
40% Long term US bonds
10% Intermediate US bonds

Now this is where I get a little confused, initially I broke that down to:

7.5% Gold (Blackrock and General Fund)
7.5% Commodities (JP Morgan Natural Resources Fund)
30% Stock (Legal and General 100 Tracker)
40% Long term US bonds (Morgan Stanley Stirling Coporate Bond)
10% Intermediate US bonds (Vanguard UK Bond Index)

I then remembered that the only people that make money on mutual funds are the managers and 90% of them underperformed - so whilst all of the above (with a minimum £100 buy in) was pending I cancelled all but the Legal and General Tracker.

I understand all of the above are funds, as apposed to picking individual stock - but are they mutual funds? Are they what I've been warned even though the fee's look low it'll kill any returns? I am really confused - it looked promising on paper but then I panicked. Would you recommended any others or are they above actually adequate?

My next problem comes in the form of creating balance with the diversifaction. They all have a £100 minimum buy in (and I am really starting with a low investment fund here) so as it stands they'd all be at 20% - to create my balance would I need to invest monthly at those percentages, would I go about it in a sense of I have (keep it simple) £100 so £7.50 gold, £7.50 commodities etc?

I think for now that's it, I am looking to start up a small, lean, investment portfolio based on what I've learned from an American book and translate it for the UK stock market.

Please any help would be gratefully appreciated - no one believes in me with this.

Thank you

Gadfium

Or, you could just buy a multi-asset, low cost "fund of funds" that have worldwide diversification built-in. That'd save a whole pile of separate fees and a lot of headache. Bung it in the cheapest S&S ISA that you can find, set up a drip feed and then get on with the rest of your life.
There's a few to choose from...the Lifestrategy funds for example.

http://monevator.com/vanguard-lifestrategy/

horace972897

Firstly I would suggest you slow down. Read some more before you go any further (the monevator link above is a great one to start with).

The portfolio you describe may well be ok for a US citizen (They think the US is the whole world anyway and their market is very big). It does not however look like the right portfolio for a UK person. If you were to try to replicate the portfolio split as you indicated then you should probably replace the US Index's for Global indexes or, if you must have home bias, UK index funds, as you have done with the FTSE 100 Tracker (L and G 100 Tracker). But you have limited your money being invested in only the top 100 or so companies in the UK. Read up there are much wider UK tracker available 250 index, 350 index, All share .....

For the bonds you have left these all as US bonds only,
People in the UK would normally invest in UK Gilts and/or Global Gov Bond funds and for corporate bonds UK and/or global corporate bond funds.

But as I say, slow down.....

Few things to think about / do:

You haven't said if you are putting your funds inside a tax wrapper (either ISA or SIPP) so I assume this is an ISA? If not I would suggest you read up on this first.

Hargreaves Lansdown might be the cheapest for you (if you are only having a SIPP with a small amount in) they are not the cheapest (or even nearly) for all cases. That said they are very good, responsive when called and their website is very slick. You might be happy to start with HL but you may want to plan moving to a different platform at some point (when your pot is big enough to be cheaper elsewhere etc)

Do you know what your tolerance to risk is? Would you panic and sell up if your funds dropped 25%, you really really really need to read some more and if you got through the other book you should eat up monevator and other sites you can find with a search on here.

Finally if you are only putting a small amount in to start with then I personally think you should stick to a smaller number of funds and stick to equities/bonds first and leave thoughts of gold and commodities until you have a big enough pot to make their diversification worthwhile.

richy999

I would be wary of basing your portfolio on the basis of just one author.
I'm sure that if you read another 'investment guru's' book, you will get an entirely different recommended portfolio split... who is to say which one is right or better?

I would second the advice given above regarding a low cost fund of funds as a good, diversified starting point. As your knowledge and experience increases, you could always move towards a portfolio of your own design.

Malthusian

I then remembered that the only people that make money on mutual funds are the managers

Paranoid rubbish. The vast majority of mainstream mutual funds make money for investors. The ones with high annual charges and useless active managers make less money, which is why many of us use trackers, but they still make money.

and 90% of them underperformed

If all fund managers were completely clueless, had no ability to identify value in the market whatsoever, and their stock selections were essentially random, then 50% of them would underperform. 50% would overperform, albeit by dumb luck. (And this is much closer to what studies have shown in reality.)

If 90% of fund managers are underperforming, they must be deliberately looking for shares that they know will do badly. 90% is far beyond what could be ascribed to randomness. Why would they do this - especially given that the better they do, the more their 0.75%pa is worth? So they can twirl their moustaches and laugh about how they're screwing over the mugs that haven't read Robbins' book?

Throw his book in the bin. You will get more useful advice in one page on here than in an entire book by some self-help guru.

redux

I'd say the main useful result in there has been to make you think about investing.

A UK based portfolio won't be the same as a US based one. And having only 30% in shares or funds might be counted as quite cautious, perhaps too cautious for some investors, while bond yields are historically very low. Gold, a whole other argument, up or down next, nobody really knows.

Treat this as just a starter point to learn more, and don't rush in too hard, or go with any opinion based on only a tiny sector of the market. Some here would say tracker funds. I'd prefer a couple of international investment trusts to start with for some of your money, followed by other trusts or funds as you start to have opinions about which areas. But that's me and some others, and doesn't mean the tracker fans are wrong, just different attitudes to the dilemma of picking funds and managers.

Froggitt

Louise199 wrote: »

I've opened an account with Hargreaves Lansdown for a mixture of low fees

:rotfl::rotfl::rotfl:

Not sure if the OP is spamming the book or HL or what. Their terminology is very American (individual stock, mutual funds), so I have no clue what their interest is in pretending to be a UK investor.

Plus it doesnt read like a first post.

jimjames

Froggitt wrote: »

:rotfl::rotfl::rotfl:

Not sure if the OP is spamming the book or HL or what. Their terminology is very American (individual stock, mutual funds), so I have no clue what their interest is in pretending to be a UK investor.

I'd give the benefit of the doubt that the reason it sounds American is that they're regurgitating the words that have come from the book without knowing the UK terminology for it.

I did have a chuckle at HL being chosen because of their "low fees" though! As the OP is aware of the importance of fees it would make sense to validate that the fees they are looking to pay are actually as low as they can be and not just the obvious annual fee (HL 0.45% vs 0.25% elsewhere) but other fees such as closing accounts or withdrawals.

Louise199

Hello - Just a quick one.

Firstly wanted to say a huge thanks to everyone who's replied, good or bad lol. I really appreciate your time and help.

Secondly - no I am not a spammer! Will happily remove the name of the book - which if I am honest annoyed me hence the 'motivational fluff' comment - it needs an 80/20 overhaul (or maybe in your eyes binning all together lol)

If I've used American terms then one poster is correct, sadly my entire knowledge (very little) is just from this one book so it's all I have to base my wording on.

I understand it isn't the greatest resource - I had hoped it would be patronising enough for the rank amateur and to give him credit his style of writing is very readable.

I really want to pour into some of the suggestions you guys have made so am going to post a more detailed post tonight when I am back.

As for HL - oops, guess I didn't research that enough then.

I know I am a complete newbie, a complete novice, I am not risking vast capital just a % of my income - I do really appreciate any help, like I said no one believes in me with this and I would love over many years to say, if only to myself, I tried

jimjames

Thanks for coming back to us, pretty much what I thought from my previous post.


Definitely something worth getting in to long term so don't let others put you off especially ones that don't understand investing.


Other companies are cheaper than HL, as you're aware of the impact of charges the difference can be significant between 0.45% with them and 0.25% with the likes of Charles Stanley or Cavendish. However HL do have a very good, helpful and functional website so you may consider that it's worth paying that extra for.


To avoid needing to buy multiple funds you could get something like the Vanguard Lifestrategy series. The mix of bonds and shares varies depending on your risk preference and you can have a version that is 100% shares (equities) which is called LS100. Others such as LS80 would have 20% bonds etc

Radiantsoul

I must say I loved the firewalking stuff that he used to do - although maybe he still does it.

The Vanguard Lifestyle funds are a reasonable starting point. People normally recommend clearing debts first, then having a new car/broken boiler/lost my job fund and only then start investing. Finally if you get any kind of pension from work with an employer match, then that is free money.