If you live in the UK and are looking for a ‘How to manage your investments’ book then you can’t do better than Smarter Investing by Tim Hale.
Now in its fourth edition, Smarter Investing remains as on-point as ever for anyone looking to successfully navigate the investing swamp.
In some ways investing resembles a ‘Choose Your Own Adventure’ exercise.
Many paths lead – well, if not to death, then to painful mistakes, regret, and lost time and money. And most of us lose a few lives as we find our way through.
But Smarter Investing is effectively a cheat sheet that maps out the best route forward in advance.
Follow Hale’s guidance and you stand an excellent chance of avoiding the perils that beset so many on their investing quest.
You could go buy the book right now. But why not read our Smarter Investing review first and feel even more confident in your purchase?
Passive voice
Hale’s prescription is a comprehensive passive investing strategy. This was near-heresy in the UK when the book’s first edition arrived – only a few months before Monevator – in 2006. But now the passive approach is mainstream and recommended by heavyweights like Warren Buffett.
However two things still set Smarter Investing apart as the go-to-book for UK investors:
- The coherent way Hale lays out the investing journey, from underlying strategy to product picks
- The level of detail. Enough to help you understand why this is the way ahead. Not so much that it’ll overwhelm a diligent newbie
Hale’s approach takes time to build, but in doing so he cogently explains:
- What good investing looks like, what it can achieve, and what the risks are
- Why passive investing works
- Why active management and big bets aren’t likely to pay off
- How to develop your strategy and asset allocation
- How to calculate how much to invest, in what, and for how long
- The investing behaviours to cultivate and, perhaps more importantly, those to avoid
By the end of the book, you’ll have a sound idea of what you’re up against, what needs to be done – and even whether you’d do better to outsource the work to someone else.
Our Smarter Investing review: a hearty thumbs-up
Part of the reason Smarter Investing is invaluable to a DIY investor is because Hale clearly describes the many choices you’ll have to make, and how to think about resolving them.
So while the text may be dry, it’s resolutely evidence-based, rational, and practical.
To that end, Hale does us DIY-ers a great favour by drafting in more rules of thumb than a multi-armed manga monster could muster.
Harvested from the crowd-sourced wisdom of the financial planning industry, these time-honoured heuristics serve far better than magical thinking or over-complicated solutions posing as science.
Indeed, Hale’s experience in financial planning means that reading (and rereading) this book is akin to having your own advisor dispensing eternal investing gems for just £20 all-in.
If in doubt, break Hale out
Because it’s so process-driven, Smarter Investing’s value lies more in having it to hand as a reference manual, rather than in its power of revelation.
Even the most dedicated passive investing monk can be easily blown off course by events, hype, and this-time-it’s-different rubber-necking.
But sitting down with Smarter Investing enables you to recalibrate and remind yourself that you’re most likely to succeed by keeping things simple and doing the basics right.
Use it to reset yourself to factory settings whenever you find your mind or portfolio is cluttered up with investing clag.
Smarter Investing 4th edition changes
I think the fourth edition is notably stronger than the third. It contains more illuminating examples, pithy quotes from investing greats*, and expanded explanations of key points.
The section on investing philosophy is much improved.
There’s also an excellent new section on Sustainable Investing.
Hale gently breaks the news that you’re unlikely to save the planet through your portfolio. But he brings us back to burning Earth without underplaying the importance of action, or leaving us despondent about our chances of making an impact.
In this, as throughout the book, Hale focuses on the art of the possible, and leaves his readers better informed about how to achieve their goals.
That said, I don’t think you need to read Smarter Investing 4 if you’ve got one of the previous editions.
Much of the material, structure, and guidance remains unchanged because, like passive investing itself, the book has stood the test of time.
Textbook execution
If DIY investing were taught in schools then Smarter Investing would be the core textbook. Indeed because it’s your money on the line you’ll surely be more motivated than any class of 16-year olds.
Moreover, some problems are just better solved with a good book. I believe embarking on your investment journey is one of them.
The Internet is all very fine – please stick with us – but it’s endless, fragmentary, and polarised.
Hale’s work, meanwhile, is less than 400-pages, systematic, focussed, and on a singular mission to equip you with the investing values and knowledge you need to thrive.
I heartily recommend it. It’s hard to imagine a more useful or empowering book for UK investors.
Take it steady,
The Accumulator
P.S. If you’re fixing your financial life for the first time then I’d pair Smarter Investing with How to Fund the Life You Want. The latter offers a bigger picture view of the UK’s personal finance universe. The former is more your investment 101 course.
P.P.S. The first reader comments below will refer to our earlier review of a previous edition. We’ve kept them for posterity. Check the dates if in doubt.
*Note: What The Accumulator has not mentioned in his Smarter Investing review is that the fourth edition also features an endorsement written by him. I’m sure TA is modestly not counting that in the improvements column! 😉
I purchased this a couple of months ago on the basis of an earlier recommendation and agree that it is something of a dry read. It is something like going back to university again.
That said, his emphasis on TER was a real eye opener for me. I had previously been somewhat complacent about this and I now realise that I have a couple of funds both of which are above 1% TER (1.69% and 1.96% – ouch). In addition I had also paid 5% up fronts on a couple of funds. If I knew then what I know now …
I am looking to offload these expensive funds eventually but I’m concerned about the timing of trying to do this at the current time.
This is the best website I have ever visited.
This is the best book I have ever read.
Monevator + Smarter Investing: Armed with both, I have the knowledge and confidence to plan and execute a wealth management strategy for my family and future generations, and have saved myself thousands paying for confidence and advice from a financial advisor.
I’ve borrowed the latest (third) edition from the library. Excellent book. The must read book for any UK investor yet to embrace passive investing, in the same way monevator is the must read website.
I can’t tell you what’s changed in the latest edition as I’ve not read it previously. Although I can tell you it it has commendably been updated to mention Bradley Wiggins and Chris Froome’s Tour de France victories.
I didn’t actually find it that dull, and whatever you do don’t let that put you off, but about excitement he says ‘my advice to you is that if excitement is what you want, book a turn on the Cresta run with some of the money you have made from being a smarter investor’.
At the risk of being hyper-critical his defensive asset discussion is the only bit of the book I would question slightly. He is too negative in my view about holding cash and too categoric about using shorter dated higher quality conventional bonds (in addition to inflation linked bonds). I’ve just taken out a 5 year cash ISA at 3% AER (with the option to withdraw with the loss of 180 days interest) and yet the gross redemption yield on a benchmark 5 year gilt is 1.6%. So I’m not sure what his argument is for being so negative about cash. His argument seems to be based on the same flawed analysis of cash in the otherwise excellent Barclays Equity Gilt study, which is not representative of the cash rates on best buy savings accounts. If you have a savings account and don’t shop around for the best rate then that could be an argument for going with shorter term conventional bonds. If you have money in a pension where there are limited cash options again that is an argument for bonds. And if you are relying on yields to go down in a scenario when equities fall in price then again that is an argument for bonds being better protection. So I would say look at bonds AND best buy savings accounts. As I say that is me being hyper-critical and there is room for different views here.
I like his concentration on the need to think logically like Mr Spock, and that the active industry thrives on the human tendency for people not to think like Mr Spock. It’s always amazed me that people can’t see the logic of low cost passive over active investment regardless of all the evidence out there that active investing ‘does not compute’.
Chapeau Tim.
Yes a must read. Although it didn’t fully make sense to me when I first read it as I was very new to the whole investing concept. I suspect that one of the shorter more accessible US books might actually be a better starting place to get people inspired.
For those of us with earlier editions (mine is 2nd) is there anything substantive in the third?
Agree with Snowman’s comments, not wanting to get into the whole bondrisk free debate again but the trouble with a SIPP is there is generally no interest-bearing cash option within it.
I had a 2% 1 year fixed rate cash offer in my H-L SIPP but that was pre-Funding For Lending and since that expired nothing comparable to replace it, so you are stuck with bonds or short-dated stuff with rubbish rates that may as well be left as cash.
In the spring my 2 yr Cash ISA fix @4.1% will also be coming to an end, boy in hindsight I wish I’d gone for a 5 yr fix instead. But regardless of rates I won’t be switching any of my Cash ISAs into Equity ISAs as I want to maintain a broadly 50/50 split between Cash and Equity ISAs.
After a recent rejig my SIPP is around 75% equities, 20% index-linked gilt fund and 5% gold (gold will tank now, just watch 😉
I guess it depends if you view your portfolio as a whole or separate components (e.g. higher risk allocation in SIPP vs low risk ISA combination = medium risk overall).
I am my own worst enemy when it comes to tinkering/active investment decisions, Tim Hales nails this aspect in his book.
I can see me coming full circle one day and putting the whole of my SIPP into a LifeStrategy fund.
@ Snowman – I agree with you, as usual.
@ Vanguardfan – agree again. It is probably a tough first read and I know a few people who’ve bounced off it, probably because it was too steep a hill to climb. But it is clearly written, so I think maybe it’s the length that some people find arduous. Perhaps a first-timers book would be The Millionaire Teacher or The Coffeehouse Investor.
I’m going to follow up with a post on some of the key developments in the 3rd edition. The fundamentals are the same (this is passive investing afterall) but it’s a good refresher.
@ Tim – cheers!
I would agree that this book along with the Four Pillars of Investing were really good reads. With thanks to this website, which I don’t quite know how I came across and those two books I would never have started my investing journey.
Grand
Actually now I come to think of it, it was this website that pointed me to the Tim Hale book as well. It was the post about ‘lazy portfolios’ I believe. And I found Monevator a couple of years ago from a google search which threw up the 2008 post ‘the one number to beat if you want to retire early’ and the rest, as they say, is history…
So TA and TI, don’t underestimate the influence you are having on a lot of people’s lives….
great review! I bought the third revision of this book a few weeks back, after spotting your take on Tim Hale’s method, in your 9 lazy portfolio’s post.
It’s a fab book, and along with your site, has convinced me to invest my ISA money from now on into a passive portfolio, rather than going for the hit and miss, fly by the seat of your pants, DIY ‘investing/trading’ style i’ve usually adopted.
Perhaps monevator could be viewed as the missing ‘investments’ section of MSE. They only deal with cash and pay lip-service toward peer-to-peer.
If this observation is correct, this site is probably worth millions..
Very much look forward to your comments on what is new in the 3rd edition, I actually paid money for the 2nd edition it was so useful. Unless there are drastic changes (which it sounds like there aren’t) I’ll borrow it from the library and skim through.
So far of the reading I have done as a beginner this was easily the best (along with Investing Demystified – which I found an easier style to read).
Sadly I think what is worth millions is the Martin Lewis brand….
I have Tim Hale’s book and whilst I found it very informative,it was a ‘chewy’ first read on investing.
Is the aforementioned ‘Investing Demystified’ aimed at the UK market?
Suppose I find the case for passive investing persuasive. Suppose I fear that ETFs will come a cropper in the next market collapse. What are the best two or three non-ETF ways to invest passively? For instance, are there any cheap closed-end funds that would do the job?
I think a fair few UK Financial Planners (IFAs) should be made to read this book too. Whilst some of the more forward thinking advisers follow the same logic as Smarter Investing, indeed it was from someone within the industry who originally suggested it to me, many are still firmly using active funds with justification little better than a wet finger in the breeze.
I believe a perfect accompaniment to Tim Hale’s book is The Number by Lee Eisenberg. Where Smarter Investing can, as noted above, be quite hard going The Number is a relatively fun read whilst still getting across the main theme i.e. how much do you really need to live on. Whilst aimed at an American audience, the underlying principles can be applied to investors anywhere.
@roconnor – It* is based pretty generally for the US and UK. I may have slightly oversold it in terms of readability, I found it easier going than Hale, but I wouldn’t take it to the beach or anything…
*this is the Lars Kroijer book I’m talking about, I notice there is another sold on Amazon with the same name
Thank you for the reply JJ
dearieme, ”Suppose I fear that ETFs will come a cropper in the next market collapse. What are the best two or three non-ETF ways to invest passively? For instance, are there any cheap closed-end funds that would do the job?”
It depends why you think they will come a cropper and what you intend to do about it.
If you are worried about synthetic derivatives that some ETF’s use to mimic an index then open end index funds such as are produced by Vanguard or HSBC are the way to go.
If you want a balanced portfolio that will mitigate part of a fall in the stock market then a mixed passive open ended fund such as the Vanguard Life strategy funds may be the way to go.
There have been a couple of closed end funds that have been passive or semi passive such as the Gartmore/Henderson Fledgling but I don’t know of any now and I don’t really see the advantage of the closed end structure as far as passive investing is concerned.
@ Dearime – you can invest in index funds – Unit Trusts or OEICs. Index funds have been around since the early 70s and that fund structure since the 1930s. It’s not closed end of course. The Edinburgh Tracker Trust is the only closed end passive vehicle I know of.
Still, ETFs have been around since 1994 and I haven’t come across any reason to distrust the broad index tracking, vanilla types any more than funds or investment trusts.
Even the warnings of a couple of years ago could be applied to any vehicle that lends stocks or entails some other type of counter-party risk. The response from the ETF industry has been to increase transparency about what they’re doing.
Thanks for the kind comments about Monevator that have somehow slipped in among the positive words for Mr Hale!
Thanks, Acc.
Thanks for a great website and for pointing out the book. It prompted me to buy the kindle version, and I’ve just finished it.
It isn’t a light read. Having said that I thought it effectively trod the fine lines between too much and too little detail, and between providing direction and being too prescriptive.
It’s given me the push I need to step back, think and plan. I’ve got a couple of pots reorganised, and also revisited others. I’ve found some surprising things, some managed fund nasties, but also some pleasant ones. My current staff pension scheme is weighting in at just over 10bps, result!
Thanks again.
“This is the best website I have ever visited.
This is the best book I have ever read”
“TA and TI, don’t underestimate the influence you are having on a lot of people’s lives….”
“With thanks to this website, which I don’t quite know how I came across and those two books I would never have started my investing journey.”
Agreed – sterling work all round!
P.S – I have a feeling that I am in the minority as a female on this website – true or a misinterpretation on my behalf?!
Cheers, Emma! We don’t have any stats on the gender breakdown but I have a feeling you’re right. Any thoughts on why that might be?
I’m not sure why people feel the need to drone on about the writing style. I read v2 over a period of a month or so, and deliberately read it slowly as I wanted to absorb and understand the arguments. The writing style was right for the subject matter. If people want entertainment and laughs, there are plenty of racy investing books out there designed to amuse. None, I suspect, are half as useful or intelligent as the Hale book.
I’m tempted by v3, but will wait to gauge whether it’s much different from the previous version. One thing I was always aware of as I read it (early 2012) was that it was published in around 2009, and presumably written a while before the dust had settled on the economic downturn. This prompted questions in my head about whether Hale’s analysis might have thrown up slightly different results if the 2007-09 data was included, and whether his conclusions might have differed slightly. From the original review, above, it sounds like the conclusions are the same but I wonder if some of the examples have changed?
Sorry about this very dry and stodgy post. Have you heard the one about the monk with the filthy habit?
Hi Andy, I say, I say, I say… here’s the one about what you’re missing in the 3rd edition (and the 1st!):
http://monevator.com/tim-hales-smarter-investing-whats-new/
@TA – between your succession plan article last week and this, thanks for sorting out my wife’s Christmas present! What a wild time we’ll have…
Do you have anything on divorce settlements? 😉
Assume you’ll get the traditional kick-back if I use your link?
Thanks for the super useful review @TA. Had a look out for this on my lunch break today in the Waterstones closest to work. Whilst I could find both Lars Kroijer’s “Investing Demystified” and Robin Powell and Jonathan Hollow’s “How to fund the life you want”, there was no sign of Tim Hale’s work. Oddly, as Smarter Investing is also printed by FT Publishing, there were several FT ‘guides’ to different aspects of finance (alongside multiple prominent copies of publications by that Rich Dad, Poor Dad fella). Looks like Hale will have to be an online purchase this time around. I did note that at least 3 x the shelf space was taken up with economics books than with investment. Perhaps it should be closer to parity?
I was a bit confused by some of the comments above, on this post about the fourth edition of the book. Then I realised that although the review was published in October 2023, and I only recently received it via email, most of the comments are from 2013! I don’t quite understand how that works.
@Phil — For various reasons, we sometimes update and repost old articles rather than post new articles.
For instance, we’ve linked to our Tim Hale review dozens of times in the 2,000-odd articles on this site. It’s better in nearly all cases if all those links point to the latest edition, rather than a review of the old edition.
There are also SEO benefits to keeping an article up-to-date, rather than writing incremental new ones.
This happens all over the web. Sites like Which and the Mail Online update some of their ‘news’ articles literally every week (or at least the date) in order to appear as fresh as possible to Google.
What we do that confuses things is, as you note, we don’t generally delete old comments. Partly that’s out of respect to the time people originally put into posting, and also because they sometimes contain still-useful relevant info.
There’s actually a note at the bottom of this article warning comments may refer to previous additions. We generally do this. Don’t blame you for missing it though. Cheers! 🙂
I have a version about 10 years old. I think you already said above you wouldn’t recommend getting the latest version in that case, but presumably some of the suggested funds etc have been updated?
The great thing about the new edition is that it gives me an excuse to reread what is possibly the most sensible and optimal long term investment advice there is. I first read this around 13 years ago when – I thought – there were still several fund managers around to disprove the point – the likes of Anthony Bolton, Neal Woodford etc.
Ha! Each time one went down, it just further cemented Tim Hale and Smarter Investing as my go to investing rulebook.
And whilst Tim was not the first to debunk active management – see the book Trillions – I would probably not have been convinced as quickly without reading his book.
But following his advice is like going on a strict diet that warns us off eating all the naughty things that are bad for us. Buying the latest hot stock, investment fad or fund is like that irresistible high fat/sugar calorific treat that I know I shouldn’t eat, and I will severely regret it later, but I want it bad and sod it, it surely must be ok cos loads of other people are buying it, so I’m having it too.
Only to regret it later.
So I now allow myself a small portion of my pot to be my naughty treat fund to go out and invest as I want – within reason – and ringfence the bulk of my pot to follow the Tim Hale way. I think this might in fact have been Tim’s suggestion in at least one of his editions.
That way I can play with my portfolio (at the edges) whilst keeping the bulk of it in low cost well diversified passive funds that I try not to touch or look at too much (ooh but even that is hard!).
And the best thing about Tim’s book – it signposted me to here, to Monevator, which is like the accompanying practical application of Tim’s rules – whilst allowing a little bit of fun and naughtiness on the side!