Resisting the instinct to tinker?

[bitchstewie]

Other than willpower and common sense has anyone struggled to sit back and do nothing with what's supposed to be a long term investment?

Part of the question comes from looking at likes of Fidelity who offer everything under the sun (almost) v. say Vanguard who only offer Vanguard products.

I could see having access to so many options being a great thing, but also a potential recipe for disaster if you don't know what you're doing?

Kid in a sweet shop anyone?

[bitchstewie]

sidicks said:

Personally I’d suggest that market / sector allocation is kept as broad as possible (or left to the professionals), with minimal changes from year to year unless you have really strong views. Don’t underestimate the impact of trading costs!

Appreciate this is a YMMV one depending what they're doing but assuming no "human" interaction i.e. done online but tons of choices from total DIY to some level of active management even of reasonably passive funds what do you consider reasonable charges?

Psychologically <= 1% doesn't sound much but equally it's still double those @ 0.4-0.5%

[bitchstewie]

sidicks said:

You need to differentiate the platform fee (“admin”) from the fund fee (“investment management”).

For passive strategies I’d expect fees [b]below 0.5%[/i] depending on asset classes / sectors.

All in?

[bitchstewie]

sidicks said:

See examples here:
http://www.hl.co.uk/funds/index-tracker-funds/weal...

Much cheaper than 0.5%

Thank you and yes, that's the fund cost but with HL for example there is their 0.45% management fee so then you're up into 0.6-0.7% all in.

[bitchstewie]

sidicks said:

Yes, that’s why I said you need to differentiate between a platform fee and the fund management fee!

Thanks, I get the difference It amazes me even as someone who knows nothing how much variance there appears to be between fund management fees (the fund fee not the platform fee) for things that at first glance appear very similar.

[bitchstewie]

GT03ROB said:

I trickle money in every month to my Fidelity account, to 6 different funds. I have 14 funds in total. Over time I have changed the geographic balance, but only really tweak this aspect through my contributions. At the outset I was very heavy in certain riskier regions which has yielded good returns, but for the last few years have been rebalancing the portfolio to more conservative regions. I probably review the mix annually & rarely make any real changes.

Yes that's a bit more what I had in mind when posting vs. traditional "company stocks" where I could easily see myself panicking.

It's always going to be willpower/common sense - just curious who does and doesn't have it

[bitchstewie]

Countdown said:

Jon

I’m not sure what your business selection strategy is and, to be honest, other than you personally stating that you’ve achieved XXX% returns over Y years, I’ve no idea how successful or otherwise your strategy has been. It would be really helpful to see WHAT stocks you have picked so we can look at things such as P/E ratios, cash flow, earnings growth, dividend growth

This is what I find interesting.

I'm still deciding which funds and provider to go with.

To do this I've been messing around on a couple of online portfolio trackers that let you simulate a portfolio and to choose the date you purchased so you get a historical "replay" of performance.

With one model portfolio I'd be up 20% if I'd put money in a year back, it's great, I'm clearly a genius!

But I'm sure if I posted them up on here and was asked to explain my reasoning I'd be torn a new one

[bitchstewie]

This is what I put in a "test portfolio":

Scottish Mortgage IT PLC
Lindsell Train Global Equity A GBP
Fundsmith Equity I Acc
Baillie Gifford Managed A Acc
Vanguard LifeStrategy 60%Equi A Acc

I tested with 20% in each to keep it simple.

Admittedly there's no logic behind it other than seeing some feedback on here and looking online and tinkering with the LifeStrategy equity/bond percentage, but of course that's one component of a one fifth constituent.

Feedback/ridicule welcome

[bitchstewie]

GT03ROB said:

I don't know those funds, but they seem from the descriptions very similar. If you input those funds into an application such as Morningstar or similar run a check on stock overlap. You may well find that you do not have the diversity you think you have. You could find the same underlying stock in each fund. Also have the same application analysis the overall diversity in terms of sector & geographical spread. You may get a few surprises. By way of example if you look at my split above it doesn't look it but the overall exposure to the US market is around 25%, rather than the 8% shown against specifc US funds.

None of this would make it wrong but you should at least understand what you are buying & be satisfied that aligns with you own thoughts,

I think you have to pay for the overlap check, least with MorningStar.

To be fair that is me playing as it comes down to the comment earlier that it's different when it's real money and it's your own.

Right now I have something more cautious in mind

[bitchstewie]

Thanks, had a tinker with allocations and with a 50% LS60 and 12.5% equally in the rest there isn't a lot of direct overlap but I guess that tool won't look inside the Vanguard funds that make up the LS60.

I've still got Lars Kroijer's book to read which will reinforce that playing it passively is statistically the safest so I do think the portfolio I'm modelling will stay just that, a model.

Got your PM by the way and fully understand