Good reads from around the Web.
Anyone who knows they could save £300-a-year by switching their energy supplier but invariably finds a freshly painted wall that needs watching will agree that overwhelming choice is a curse.
I’m a bit nerdy about money and I know I should review all my standing orders and whatnot every 12 months or so, but to be honest I don’t.
Life feels too short to wade through all the alternatives – however much I tell myself the savings equate to a substantial hourly wage.
Happily I do manage it every 2-3 years. The worst kind of choice paralysis is when you never make the decision, with devastating long-term consequences.
It doesn’t really matter what brand of peanut butter you buy.
But it surely matters if you want a life partner yet keep dating until your life is half over because you just couldn’t make your mind up.
A plethora of potential portfolios
Closer to the soul of Monevator, it’s a bit tragic if you put off long-term investing not because you never took any interest, but because you did, only to find there were too many options to choose from.
A deep article on the paradox of choice [1] in The Guardian has some insights on this:
Which of us, really, feels competent to choose between 156 varieties of pension plan?
Who wouldn’t rather choose to lie in a bath of biscuits playing Minecraft?
And yet, at the same time, we are certain that making a decision about our workplace pensions is an important one to get right.
But instead of making that choice, [the researcher says] many defer it endlessly.
One of his colleagues got access to the records of Vanguard, a gigantic mutual-fund company, and found that for every 10 mutual funds the employer offered, rate of participation went down 2% – even though by not participating, employees were passing up as much as $5,000 a year from the employer who would happily match their contribution.
We see something similar in comments on Monevator from people who’ve read all about the different portfolios [2] in our passive investing guides [3] but cannot decide where to get started – or when.
Some never do.
Similarly, while I doubt it’s useful to debate whether you should have 1.26% in frontier markets or just the 0.93%, I’m certain it’s better to think about it when the other 98% of your funds have been sensibly invested.
Choose life
This is why I often suggest [4] to new investors that they just get started splitting their money 50/50 between cash and a UK tracker fund.
When I mention this, knowledgeable readers often protest, perhaps even with a strong dose of being aghast.
Haven’t we written reams about global markets, bonds, asset class diversification and so on? Surely I of all people should know that a 50/50 split between UK stocks and a bank account is not optimal?
Of course I do and no it’s not. But it’s inordinately better than not saving at all.
Like a lot of things – a good diet, jogging, going to nightclubs – investing gets more compelling the more you do it. Best just to get started, and to make refinements as you go.
It will hopefully be a long journey. Plenty of time for thinking once you’re underway.
From the blogs
Making good use of the things that we find…
Passive investing
- Are index funds fatally flawed? – Canadian Couch Potato [5]
- Basic arithmetic the fund industry won’t acknowledge – T.E.B.I. [6]
- Should you run an active side-portfolio for fun? – A.W.O.C.S. [7]
- Strategic apathy and the mediocre investor – Abnormal Returns [8]
- The small cap secret no one told you about [Nerdy] – The Irrelevant Investor [9]
Active investing
- Identifying great companies – Richard Beddard [10]
- Did you check your emotions in the crash? – Investing Caffeine [11]
- Emerging markets do look cheap – The Reformed Broker [12]
- Pros and cons of sector investing – SPDR blog [13]
- Investing isn’t easy (on the predictable Globo fallout) – Expecting Value [14]
- WH Smith: Good growth, shame about the pension – UK Value Investor [15]
Other articles
- Beware your inner zombie – The Value Perspective [16]
- S&P 500 Vs hedge funds [Hilariously poor returns] – The Big Picture [17]
- London salaries: Real-life examples – FIRE v London [18]
- Dr Evil’s money mindset mistakes – The Escape Artist [19]
- 5 bad reasons to invest – Bankers Anonymous [20]
- Startups under-reward their employees – Via Medium [21]
- Quit early with an auxiliary fund [Beware dividend cuts!] – Dividend Mantra [22]
- Ermine turns to maths in tackling compound interest – SLIS [23] (vs me [24])
Product of the week: ThisIsMoney [25] says the upcoming £1,000 personal savings allowance could make taxable savings accounts more attractive than cash ISAs for many (although I’d imagine the rates on offer will change when the allowance comes in). For example, Virgin Money [26] currently has the best one year fixed-rate ISA on the market, at 1.81%. But Charter Savings Bank’s [27] one-year bond beats that with a potentially taxable 2.07%.
Mainstream media money
Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1 [28]
Passive investing
- 5 ways the European ETF market is developing – ETF.com [29]
- Is factor investing a free lunch? – MarketWatch [30]
Active investing
- Lunch with T. Boone Pickens – Motley Fool (US) [31]
- Tough decade ahead for US stocks, says Jack Bogle – Morningstar [32]
- The financial tide has turned for Valeant [Search result] – FT [33]
- 60/40 portfolios in a near-zero percent world – Institutional Investor [34]
A word from a broker
- Don’t kid around with Junior ISAs – Hargreaves Lansdown [35]
Other stuff worth reading
- ‘Pensions ISA’ decision deferred [Search result] – FT [36] (recall your input [37]?)
- Hammer hits value of alternative assets [Search result] – FT [38]
- London property most expensive in world, says UBS – BBC [39]
- A fifth of under-26 year-old adults still live at home – Guardian [40]
- Dealing with impostor syndrome – New York Times [41]
- Silicon Valley is bad for your health – Fortune [42]
- The rise and fall of the .ly domain – Priceonomics [43]
Book of the week: An overview [44] in the Telegraph explains that author Lee Freeman-Shor divides active investors into five categories – rabbits, hunters, raiders, connoisseurs, and assassins – in his attempt to figure out why fund managers typically pick losing stocks but may still make good gains. Passive investors can safely look away now, but I was intrigued enough to put The Art of Execution [45]
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- Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [↩ [50]]