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This former hedge fund manager reveals how you can invest for life in five quick videos

Photo of Lars Kroijer hedge fund manager turned passive index investing author

I have spent years looking for the best way to get people interested in investing – and to teach them how to do it once they’re hooked.

Some methods work better than others.

But with bribery expensive and the threat of physical violence a clear violation of my parole conditions, video has proven to be about the best gateway for would-be investors who can’t be persuaded to read a book (which is quickly becoming nearly everyone, let’s face it).

Videos about passive investing are especially useful, because there’s not really much to it that needs detailed explanation

Save regularly into an index fund or two, rebalance when things get out of whack, and beat the vast majority of managed funds – it’s an offer most people can’t refuse.

Of course, you and I know there are loads of niggles and quirks that can expand those basics into a book (or a 2,000-article blog!)

But let’s not scare the newbies by revealing we’re really Dungeons & Dragons style nerd-lords of investing, eh?1

Investing explained in five simple videos

Bottom line: When friend of Monevator Lars Kroijer told me he was working on a new video series, I smelt the chance to win new blood to the investing cause.

His five-part video series, which I’ve published below, goes from 0-to-invested in a little bit more than 60 seconds – but much less than an hour.

So why not send this article to the investing virgin in your life today?

It’s as easy as watching cat videos or Lululemon yoga workouts, only it’s about, um, index funds!

Beats hitting someone over the head with a copy of Investing Demystified or Smarter Investing any day.

Video 1: Why index funds? An overview from Lars Kroijer

Most people – whether professionals or private investors – have no chance of beating the markets in the long run, especially after fees and other costs.

Video 2: You can’t beat the market or pick market-beating funds

Far too many people believe they can beat the market – and far too few people have any incentive to tell them otherwise.

Video 3: You only need one cheap world equity index fund

So you’ve decided you don’t want to try to beat the market or waste money paying a manager to fail to do so. Fear not – by investing in a world equity index fund you can achieve global gains at the lowest possible cost.

Video 4: How to adjust your portfolio to suit your risk tolerance

Vary the proportion of your portfolio that’s allocated to the lowest-risk assets – cash and government bonds – to best reflect the stage of life you’re at, and the risk you’re able to bear.

Video 5: Implementing your low cost index fund portfolio

How to select the right products for your hyper-efficient best-in-breed passive portfolio, and how to keep your strategy on track.

Still not had your fill of Lars Kroijer? Read Lars’ posts on Monevator, or check out his book, Investing Demystified.

  1. No offense to D&D-ers: Both The Accumulator and I have done time in the caverns with a dozen D6 and a Vorpal Sword of +3 slashing. []
Filed under: Passive investing

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{ 57 comments… add one and remember nothing here is personal advice }
  • 51 magneto August 21, 2016, 4:10 pm

    @JohnD

    Yes. The Fixed Income problem is one we are all struggling with at present.
    Call me ‘old fashioned’ but I too find difficulty investing in an asset with negative real yields, to thus see capital after inflation, wasting away in purchasing terms.

    But perhaps those wiser than us, who are today buying Gov’t Bonds at -ve real yields and even in some countries with -ve nominal yields, see the possiblity of deflation coming to the rescue, after a brief inflationary spurt? Or that the possible -ve correlation is worth hanging on for?

    Presently our portfolio on the FI side (asuming RPI running at 1.5%), contains :-
    Short Term IG Corps (circa 1.1% real yield)
    Infrastructure ITs (circa 3.6% to 4.2%) as IL Gilt proxies.
    But neither is likely to offer -ve correlation with Stocks, altho the former’s volatility is limited by short duration.
    We sold our final tranche of Gilts this year, too early!!

    Have dabbled in to P2P but did not find that area comfortable mainly due to illiquidity, although using an IT can overcome that particular drawback.
    Only today at my wife’s insistence did we look again at the P2P and specifically the IT P2P, but did not like the look of the underlying financials. The Investor’s articles on P2P also were helpful.
    But the ITs remain an option when liquidity valued!

    Again all other ideas welcome.

  • 52 Naeclue August 21, 2016, 6:52 pm

    Great videos and really interesting comments and links. I have been following something very close to this strategy for over 20 years so you are preaching to the converted. I was going to raise 2 objections but the last video spiked my guns.

    The first thing I was going to say was that once the equity fund gets to a reasonable size, it becomes much cheaper to hold separate geographical trackers. Added to that, holding the US equities as a US listed ETF inside a qualifying SIPP means you can save on the US dividend withholding tax.

    The second thing is similar. Once your gilt fund reaches a certain size it becomes cheaper to simply hold a gilt ladder and FSCS protected cash deposits. For example, just hold 7 6 through 12 year gilts, then once per year sell the shortest dated gilt for a 12 (ish) year gilt. You are only turning over one seventh of your portfolio per year at low cost and not paying a fund manager to hold your gilts.

    I manage my own global index portfolio slightly differently than simply following whole market allocations, for the reason that Hariseldon has raised. I lived through the Japanese equity bubble and so I apply a cap to different regions. For example, I do not allow my Japanese trackers to exceed 12% of the overall allocation to equities.

  • 53 Naeclue August 21, 2016, 7:20 pm

    The links to articles by Michael Edesess are very interesting. However, I think he is too dismissive of Bernstein. All Bernstein is really saying is that if bonds returned an annualised 2% over 20 years and equities 6%, then a 50:50 annually rebalanced portfolio can be expected to return more than the average 4% annualised. There are good theoretical reasons for this and it is empirically observed. The difference between the simplistically expected average of 4% and the actual return is what Bernstein calls the Rebalancing Bonus and I do not see anything wrong with that as it is more likely to be positive than negative.

  • 54 Naeclue August 21, 2016, 7:57 pm

    A quick anecdotal point on the bonds not worth buying debate.

    In January, Instead of mindlessly sticking to plan and rolling my 5 year gilt into a new 12 year, I did some clever thinking and worked out that I would be more likely to benefit by putting the cash into deposit accounts.

    I have just checked and discovered that had I stuck to plan, not only would I have accrued around 2.3% in interest, I would be sitting on a 10% unrealised capital gain.

    We are at times our own worst enemies.

  • 55 Lars Kroijer August 22, 2016, 12:33 pm

    Thanks for the continued comments. I’m going to do a Q&A and comments section on the site and these comments are v good for that. Just finishing 2nd edition and helpful for that as well (will be out in appx 5 months depending on how quick the publisher is). Certainly agree on free argument w/ world tracker. For some reason I don’t think there has been enough pricing pressure on those trackers compared to S&P500, etc., but in time the costs for world trackers will also come down. I’d really caution everyone to spot trends/ avoid peaks/ etc. Not so much b/c you may be systematically wrong, but more because it tends to lead to a lot of trading which gets very expensive over time, including because of taxes.

    For those of you who are London based I’m giving a talk later in the year that will be open and you are welcome to come along. Send me an email on lars@kroijer.com if you want me to add you to the list.
    Thanks again!

  • 56 Daniel August 24, 2016, 9:41 pm

    Great videos, really nice presentation. I have a few questions.

    Since only 1 in 10 funds best the market, does that suggest that Susan should hang it up and also buy a passive world index tracker? Of course she makes a great living running her fund because she is paid on assets rather than outperformance. But does the fund exist solely because of the naivety of retail investors who invest in her fund because they foolishly believe she will outperform the market net of fees? Is it all a giant waste of time (at best; or a massive fraud at worst)? Is most of the financial sector a vast waste of resources (from the vantage point of society as a whole)?

    Also, if market prices reflect all available information and analysis, does that suggest that a random but diversified portfolio of individual stocks should do about as well as Susan’s fund or any of the others? If 90% of funds underperform anyway, and if market prices reflect all available information and analysis, then are my chances as an individual stock picker really much worse than Susan’s, despite her credentials, connections and resources, or am I stretching the point? Not that it would be a good idea, of course; I’m just curious on the theoretical matter.

  • 57 The Rhino September 8, 2016, 4:06 pm

    does have anyone have any minimal (say 2 to no more than 4 ETFs) UK ETF based example portfolios that could be considered Kroijer-esque?

    I want to have a crack at re-structuring my SIPP from funds to ETFs to cap ad-valorem expenses

    It has to be simple though as it would be replacing lifestrategy (if only VG would release LS ETFs they would be the answer to my prayers)

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