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No time to invest? If you’ve resolved to sort out your pension in 2016, try this…

I spend so little time on my investments that it feels wrong. How can I expect to succeed without any effort?

You get back what you put in, right?


Investing is one of the most counter-intuitive of activities going, because we can only meaningfully judge the results over several decades, not the hours or days our human brains are wired for.

Just how counter-intuitive is it? In investing:

  • You don’t get what you pay for.
  • Doing nothing is generally better than doing something.
  • The herd usually gets fleeced as they stampede from gold to Russia to pig trotters in search of the jackpot.

As legendary investing strategist Charles D Ellis said:

The saddest chapters in the long history of investing are tales about investors who suffered serious losses they brought on themselves by trying too hard or by succumbing to greed.

Don’t be a postscript to the next sad chapter.

Ignorance is bliss

Because I’m into investing, friends will often ask me what the FTSE 100 is doing or whether yak futures are hot or not.

Embarrassingly, I don’t know.

I just don’t worry about it, because knowing how many points the FTSE moved last week doesn’t help me achieve my goals.

If anything knowing that sort of stuff is counter-productive. It’s akin to being afraid to go out at night because you’ve watched too many episodes of Crimewatch.

Instead, my passive investing operation works like this:

Set your investments to automatic

Here’s how it fits together:

  • My online broker silently funnels that cash into the funds I’ve preset as regular investments.
  • My asset allocation already contains all the mutually supporting investments I need to grow my nest egg and hopefully weather any storms that come along.

It all ticks along famously without bothering me.

The passive investing revolution will not be televised

It takes me just 30 minutes a month to double-check that everything has gone according to plan between bank and broker. Nothing is ever amiss, but I’m a paranoid soul.

I also tune in every now and then to update my portfolio tracker. And I rebalance my holdings annually.

Rebalancing and reassessing my contributions once a year takes a few hours in total.

The rest of the time, I’m really not needed. It’s like a clockwork machine that just needs a bit of oil and a service now and then.

Sounds too easy? Well, we already know that passive investors will beat active investors on average.

If you think that you can pay someone to help you top the investment hi-score tables – and for some reason you think you need to top the tables to succeed (you don’t) – then there are plenty of people who are willing to charge you a massive fee for believing in fairy tales.

A crash course

The effort you need to put into investing is front-loaded. It’s worth understanding how the basics work at the start, so you don’t get ripped off or self-sabotage later.

Think of it like the time you put into buying a house. Doing some legwork is the best investment you can make in yourself because it’s incredibly important to make the right choice. Your future happiness depends upon it.

Here are some pointers.

  • For the quickest summary of the basics, read William Bernstein’s If You Can. It’s 40 pages short and it is free on Kindle.

You’ll now understand why passive investing is the best way for you to go.

To turn that underlying philosophy into a concrete plan of action then UK investors just need to pick one book from the following:

Finally, if there’s anything you’re not sure about or want more practical help with, then not even modesty can prevent me from admitting that there’s no better place to go in the UK than our own passive investing HQ.

Get rich slowly

That’s it. Read two books – one easy, the second more comprehensive – then reinforce your understanding with our series of key passive investing posts.

You’ll be better informed than the vast majority of investors out there. You should easily know enough to manage your own investments with minimal impact on your time1.

There’s always more to learn, of course, especially for investing nerds like yours truly.

But if you haven’t got the time or the interest then at least you can move on in the knowledge that once you’re set up, the hard work is already done.

Whatever you do, just don’t end up writing a blog about it.

Take it steady,

The Accumulator

  1. Note you may need professional assistance if you’re trying to do something fancy, to do with taxes for example. If you need financial advice, look for a flat fee adviser with a good reputation who charges by the hour. []
{ 27 comments… add one }
  • 1 gadgetmind January 13, 2015, 10:44 am

    I used to use automatic dividend reinvesting but now don’t because, 1) I’ve switched to ETFs and accumulating ones are rare, 2) it’s cheaper for me to accumulate some cash and use this to rebalance (buy whatever is most under target) a couple of times a year, 3) having some cash being thrown off will work well when I start drawing on my pension, 4) I like seeing the dividends rolling in!

  • 2 Dominic January 13, 2015, 3:36 pm

    Funnily enough, it was reading “If You Can” that led me to this blog. I am slowly making my way through the recommended reading and have covered three chapters of Common Sense on Mutual Funds. When I’m done with Bogle, I’ll check out the Kroijer or Hale books you have recommended – thanks: anything else worth reading which hasn’t been previously discussed on Monevator?

    To the point of your article, what made me realise the value of passive funds was some exposure to the financial world. I am coming to the end of a two year training contract at a city law firm, in which I have had the displeasure of reviewing from beginning to end numerous prospectuses for debt and equity issuances and IPOs. For me, it was the process of reading and drafting endless, exhaustive risk factors that drove home what a gamble investing can be and how difficult it is to take an informed view on the business, the industry in which it operates and the wider market.

    Perhaps I am overly cautious, but if investment analysis is a full-time job for smart engineering graduates (who will likely also be your counterparty for any buying and selling) an average Joe like me is more than happy to accept market returns less costs!

  • 3 SemiPassive January 13, 2015, 7:33 pm

    By coincidence I just got a bunch of confirmations of automatic ETF dividend reinvestments today, which was nice. H-L offer that facility for one, sure other brokers and platforms do as well.

  • 4 gadgetmind January 13, 2015, 7:41 pm

    I’m not sure BestInvest do, but I’m on a cracking deal with them overall, so a few £7.95s a year to rebalance is no big deal.

  • 5 gadgetmind January 13, 2015, 10:34 pm

    > if investment analysis is a full-time job for smart engineering graduates

    That would be a near criminal under use of valuable engineering skills!

  • 6 @algernond January 13, 2015, 10:49 pm

    ‘And I rebalance my holdings annually.’

    But what if there is a sudden 20% dip in stocks ? Surely you’d rebalance to take advantage ?

  • 7 The rhino January 14, 2015, 8:44 pm

    It’s not free unfortunately. It’s 0.99p. Gutted

  • 8 phil January 16, 2015, 2:01 pm

    @the rhino if you google it,you can get it free in pdf.

  • 9 The Accumulator January 16, 2015, 2:55 pm

    @ Dominic – it’s not just the brains it’s the brawn too. You’re up against guys who’ll work 100 hour weeks on this stuff and have access to support teams, research and computing power that would make NASA jealous.

    Recommend Hale or Kroijer for a UK perspective. Hale is more comprehensive, Kroijer is shorter.

    I’d also recommend Winning The Loser’s Game by Charles Ellis and anything by William Bernstein.

  • 10 theRhino January 16, 2015, 11:09 pm

    @phil – good spot – now have it for 0.00, result..

  • 11 laptop Mom January 17, 2015, 2:48 am

    My first books that really helped me to even begin to learn about investing were: INVESTING FOR DUMMIES and PERSONAL FINANCE FOR DUMMIES. Great books and just as if Bogle would write them.

  • 12 Adam January 21, 2015, 3:32 am

    Always better for the average or just busy person to index. I personally have my 401k with the bulk of my funds, indexing, while having a more active value/dividend strategy in my smaller IRA and trading account.

  • 13 Kalie January 21, 2015, 7:06 pm

    Thanks for the book recommendations. Sometimes it’s hard to know where to start with a topic like investing. This approach seems like a good way to not get obsessed with how the market is doing while still investing and growing wealth.

  • 14 Fremantle January 12, 2016, 11:43 am

    Great reminder in this time of volatility.

  • 15 NearlyThere January 12, 2016, 12:56 pm

    @algernond: That could be classed as market timing, depending on what the investor’s rebalancing strategy is 🙂
    The article says that the TA’s strategy is Annual http://monevator.com/the-simplest-way-to-rebalance-your-portfolio/. There are other strategies, like Threshold http://monevator.com/threshold-rebalancing/. But pure Threshold requires looking at the portfolio more often, which is generally considered a bad thing http://monevator.com/why-you-shouldnt-track-your-investment-returns/.
    Annual rebalancing is easy, low effort, avoids tinkering temptation, is not likely to incur much transaction cost and appears to be “good enough”. What’s not to like about that?
    More to the point: a) have a plan; b) stick to it.

  • 16 magneto January 12, 2016, 1:05 pm

    Recently read ‘The Informed Investor’ by Frank Armstrong published 2004. Cost all of £0.01p used, plus postage!
    Note – Written for US investors.
    However the book is an easy read and full of common-sense.
    One for the passive elite!

    Has now joined a select list of about a dozen books to re-read regularly on the book-shelf, as a reminder of key investment reasonings.
    Seems seldom recommended on investing web-sites, which is odd!
    Worth seeking out esp at the price!

    Also very much enjoying Ben Carlson’s book as recommended by ‘The Investor’. This too may join the select list, at the expense of some of Wm Bernstein’s writings, although ‘The Intelligent Asset Allocator’ will almost certainly remain.

  • 17 Jim McG January 12, 2016, 1:23 pm

    Such good advice and nicely summarised. Keep it simple. If people would follow your advice the world would be a better place. Ooops, need to go, just checked the FTSE and it’s heading back toward 6,000, up 1.62% today, need to get in there before it heads back up toward 7,000 by selling some of my Emerging Market donkeys……or maybe my oil funds. What do you think?

  • 18 Topman January 12, 2016, 1:46 pm

    @Jim McG “Keep it simple”

    My self-devised acronym is KISMIE – Keep it simple make it effective 🙂

  • 19 PC January 12, 2016, 2:12 pm

    Is it just me? Amazon is offering me If You Can for free only if I pay them £7.99 a month for Kindle Unlimited .. http://www.amazon.co.uk/gp/product/B00JCC5JKI/ref=as_li_tl?ie=UTF8&camp=1634&creative=19450&creativeASIN=B00JCC5JKI&linkCode=as2&tag=intheblackblo-21&linkId=AMESACLH6SI3KLK2

  • 20 oldie January 12, 2016, 2:44 pm

    go to Bernsteins website efficientfrontiers and you can download for free.
    And then email it to your Kindle
    good luck

  • 21 Gregory January 12, 2016, 5:42 pm

    Did you know Charles Ellis invested in a company that makes active stock picking?
    CONSUELO MACK: And you invest in Berkshire-Hathaway, correct?
    CHARLES ELLIS: I do, have done for almost 40 years. I think he’s going to be able to do it for as long as he wants to. But I couldn’t possibly predict who is the next best chance for being Warren Buffett. Warren is a fabulous individual. The rest of us aren’t.

  • 22 The Rhino January 12, 2016, 7:33 pm

    just a quick heads-up to sell everything and head for the hills – so my good friends at RBS tell me..

    Or possibly if the banks predict calamity everything will be fine and vice versa

  • 23 PC January 12, 2016, 8:06 pm

    @The Rhino LOL maybe RBS should have sold everything last time instead of buying ABN Amro with other people’s money

  • 24 MyRichFuture January 12, 2016, 8:33 pm

    When you’re over 10 years from retirement (like me) it doesn’t matter a damn what the markets are doing. Just stick to a low-cost diversified plan and keep on drip-feeding. Then Netflix and chill!

  • 25 The Rhino January 13, 2016, 11:21 am

    @MyRichFuture – dangerous words – you clearly don’t believe in Murphy’s Law 😉

  • 26 SemiPassive January 13, 2016, 3:36 pm

    Just completed an annual rebalance myself, and have finally admitted defeat on avoiding bonds due to interest rate hike fears. I had balanced a very high % of equities in my SIPP against a healthy chunk in Cash ISAs. But it has just been too volatile, so have moved to a 70/30 split within the SIPP for now. With Cash ISAs taken into account thats about 55% in equities overall, and the remaining 45% is more in cash than bonds. So fairly resiliant whatever happens.

    To great shame the RBS doom mongering gave me a nudge to complete the rebalance. But now I can even read Albert Edwards reports without breaking into a sweat. 🙂

  • 27 JohnG January 13, 2016, 5:28 pm

    @algernond: You’d have to find a situation in which there was a considerable fall that disproportionally affected a subsection of your total portfolio. Even then, to avoid trying to time the market, you’d be limited to either changing how your next few payments were distributed or selling off stock in better performing markets.

    I invest a fixed amount manually each month, and I vary how much of each fund I buy based on my current balance, however the difference this is likely to make is negligible over automating everything and tidying up each year.

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