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The Slow and Steady passive portfolio update: Q2 2013

The portfolio is up 17%

Because I practice the art of portfolio insouciance, I missed the exact moment our Slow and Steady demo portfolio hit its peak in May. The undulating graph on my portfolio tracker tells me we were up something like 22% as the rollercoaster car crested the hill.

I wasn’t watching and my stomach skipped the ride, so all I care about is we’re still up 17% on purchase, with a cash gain of £1,600 – a smidgeon better than last quarter.

It’s strange, but like tuning in for late-night sport, the emotion is flattened when you’re not viewing it live.

Here are the bare bones:

The only way is up (hopefully)

This snapshot is a correction of the original piece. (Click to make bigger).

The Slow and Steady portfolio is Monevator’s model passive investing portfolio. It was set up at the start of 2011 with £3,000 and an extra £750 is invested every quarter into a diversified set of index funds, heavily tilted towards equities. You can read the origin story and catch up on all the previous passive portfolio posts.

Platform choose

No doubt we will do better and we will do much worse. Our graph will oscillate like a skipping rope but let’s focus instead on something we can control – the cost of our portfolio now platform charges are inevitable.

In brief, whereas the cost of holding a fund through a broker or fund supermarket was previously hidden away in its Ongoing Charge Figure (OCF), that charge will now be explicit, and bigger for small investors.

There’s no avoiding it. The FCA1 has decreed that DIY investing platforms must switch to the new charging model over the next couple of years.

Before too long, we’ll all be buying so-called clean funds – funds that no longer conceal platform fees within their OCF – from brokers that cake on an additional charge for their services. Better that slightly pungent cherry on top than a scattering of putrid currents buried in the mix.

Old-style ‘free brokers’ that aren’t really free, selling funds with swollen OCFs, will gradually disappear, and our Monevator broker comparison table will help you hopscotch through the minefield until then.

For now, I’m going to choose Charles Stanley Direct as the Slow and Steady’s new clean fund, execution-only broker. Its 0.25% platform charge is the cheapest option available for a small portfolio like this one. At that rate, we’ll hand over £28.50 per year in platform fees if the portfolio got stuck at its current £11,408 value.

Once our investment needle reaches about £20,000, we may well be better off with a fixed fee broker. That moment looks a few years off yet.

The good news is that index fund OCFs continue to decline, going some way to off-setting the increased platform fees.

So while we’re in upheaval mode, I’m taking the opportunity to sell off most of our old funds and switch into cheaper versions, mostly from BlackRock’s Tracker Fund D range.

Here are our moves:

Old fund TER/OCF (%) New fund TER/OCF (%)
Vanguard U.S. Equity Index 0.2 BlackRock US Equity Tracker Fund D 0.18
Vanguard FTSE Developed Europe ex-UK Equity Index 0.25 BlackRock Continental European Equity Tracker Fund D 0.18
L&G Global Emerging Markets Index I 0.52 BlackRock Emerging Markets Equity Tracker Fund D 0.28
HSBC Japan Index C 0.23 BlackRock Japan Equity Tracker Fund D 0.18
HSBC Pacific Index C 0.31 BlackRock Pacific ex Japan Equity Tracker Fund D 0.24
HSBC UK Gilt Index C 0.17 Vanguard U.K. Government Bond Index Fund 0.15

The total weighted OCF of the new portfolio is 0.18% (plus the 0.075 weighted stamp duty charge incurred by the Vanguard UK equity fund.)

That compares to 0.23% for the old version of the portfolio.

It’s possible to buy a slightly cheaper UK fund – the Royal London UK All share Tracker Z Fund – but I’m happy to stick with Vanguard as I suspect it will make up the 0.01% difference by keeping a tighter rein on tracking error.

Health warning!

Note that willy-nilly fund switching for a few hundredths of a basis point in cost improvement is not to be recommended. The change I’ve just made is worth all of £6 per year at the portfolio’s current valuation. You could easily lose many times that if the market spiked while you were hokey-cokeying your funds.

I’m only doing this because this is a demo portfolio that’s designed to present the best possible set-up for new investors.

You might also simplify the portfolio by ditching the separate US, Europe, Japan and Pacific funds in favour of the do-it-all Vanguard FTSE Developed World Ex-UK Equity index fund.

Or you can be lazier still and buy Vanguard’s one-stop-shop LifeStrategy funds.

Again, it’s a fraction more expensive than the Slow and Steady investments but a whole lot quicker to manage. Just add direct debit et voila – instant portfolio!

New transactions

Every quarter, we lob another £750 into the maelstrom, divided between our seven funds according to our asset allocation.

This quarter the funds we use have changed but of course our asset allocation remains all-important, as that’s what determines where we have our chips.

Here’s the skinny on our latest reshuffle.

UK equity

Vanguard FTSE U.K. Equity Index Fund – OCF 0.15% (Stamp duty 0.5%)
Fund identifier: GB00B59G4893

New purchase: £112.50
Buy 0.6276 units @ 17926.5p

Target allocation: 15%

Developed World ex UK equities

Split between four funds covering North America, Europe, the developed Pacific and Japan2.

Target allocation (across the following four funds): 51%

North American equities

Vanguard U.S. Equity Index Fund – OCF 0.2%
Fund identifier: GB00B5B71Q71

Sell: £3,272.86

Replaced by:

BlackRock US Equity Tracker Fund D – OCF 0.18%
Fund identifier: GB00B5VRGY09

New purchase: £3,460.36
Buy 2,714 units @ 127.5p

Target allocation: 25%

OCF has gone down from 0.2% to 0.18%

European equities excluding UK

Vanguard FTSE Developed Europe ex-UK Equity Index fund – OCF 0.25%
Fund identifier: GB00B5B71H80

Sell: £1,379.33

Replaced by:

BlackRock Continental European Equity Tracker Fund D – OCF 0.18% Fund identifier: GB00B83MH186

New purchase: £1,469.33
Buy 979.553 units @ 150p

Target allocation: 12%

OCF has gone down from 0.25% to 0.18%

Japanese equities

HSBC Japan Index C – OCF 0.23%
Fund identifier: GB00B80QGN87

Sell: £927.35

Replaced by:

BlackRock Japan Equity Tracker Fund D – OCF 0.18%
Fund identifier: GB00B6QQ9X96

New purchase: £979.85
Buy 702.401 units @ 139.5p

Target allocation: 7%

OCF has gone down from 0.23% to 0.18%

Pacific equities excluding Japan

HSBC Pacific Index C – OCF 0.31%
Fund identifier: GB00B80QGT40

Sell: £728.15

Replaced by:

BlackRock Pacific ex Japan Equity Tracker Fund D – OCF 0.24%
Fund identifier: GB00B849FB47

New purchase: £780.65
Buy 378.589 units @ 206.2p

Target allocation: 7%

OCF has gone down from 0.31% to 0.24%

Emerging market equities

Legal & General Global Emerging Markets Index Fund I – OCF 0.52%
Fund identifier: GB00B4KBDL25

Sell: £997.31

Replaced by:

BlackRock Emerging Markets Equity Tracker Fund D – OCF 0.28%
Fund identifier: GB00B84DY642

New purchase: £1072.31
Buy 992.87963 units @ 108p

Target allocation: 10%

OCF has gone down from 0.52% to 0.28%

UK Gilts

HSBC UK Gilt Index C – OCF 0.17%
Fund identifier: GB00B80QG383

Sell: £2,390.65

Replaced by:

Vanguard UK Government Bond Index – OCF 0.15%
Fund identifier: IE00B1S75374

New purchase: £2,570.65
Buy 20.253 units @ 12692.95p

Target allocation: 24%

OCF has gone down from 0.17% to 0.15%

New investment = £750

Trading cost = £0

Platform fee = 0.25% per annum

This model portfolio is notionally held with Charles Stanley Direct. You can use that company’s monthly investment option to invest from £50 per fund. Just cancel the option after you’ve traded if you don’t want to make the same investment next month.

Take a look at our online broker table for other good platform options. Look at flat fee brokers if your ISA portfolio is worth substantially more than £20,000.

Average portfolio OCF = 0.18% down from 0.23%

Take it steady,

The Accumulator

  1. The Financial Conduct Authority, which has replaced the FSA []
  2. You can simplify the portfolio by choosing the do-it-all Vanguard FTSE Developed World Ex-UK Equity index fund instead of the four separates. []
{ 99 comments… add one }
  • 1 The Shoestring Investor July 9, 2013, 12:08 pm

    I think I might be missing something, but I’m struggling to work out how your emerging markets index is up 7.7% since purchase but down £83 in the same period. Could you clarify this for me?
    Looks like you’re doing pretty well overall though!

  • 2 Sharkey July 9, 2013, 12:49 pm

    A question for the assembled experts – I have a shares isa with TD paying monthly into 4 funds. The fee structure has now changed so that it costs £1.50 for each fund purchase each month (£72 per year). I think in theory I could reduce the charges to £1.50 a month (£18 per year) by buying only one fund each month (rotating to a different fund each month). Is the savings in fee worth it? or are the benefits of pound cost averaging big enough for each fund to stick with it?

  • 3 Dave July 9, 2013, 1:08 pm

    I think Charles Stanley Direct has a minimum investment of £500, so it might be pretty hard to squeeze in the £750 quarterly dripfeed/rebalancing.

  • 4 Greg July 9, 2013, 1:10 pm

    It has? That’s news to me. There’s no mention of that on their website either, or in their T&Cs. It doesn’t seem very likely at all that they would do that. (There has always been a £1.50 charge for buying shares / ETFs in their regular investment scheme.)

    If they do have that charge then yes, I’d rotate. I probably wouldn’t bother to rotate each month though. In fact, I’d probably just dump it all in a single Vanguard LS fund.

  • 5 Dave July 9, 2013, 2:04 pm

    @Sharkey I think the £1.50 is what you see on the regular purchases on TD Direct screen. The regular purchases are actually fee free, this is just the poor way in which they display it.

  • 6 Sharkey July 9, 2013, 2:32 pm

    Ah – you’re right they’ve just changed the way they display the figures!
    What is really confusing is that I had some trades pending which showed the value minus the trading fee but now they are executed they are showing the total with no fee deducted.
    I clearly haven’t been paying attention to the bumpf from TD

  • 7 Neverland July 9, 2013, 4:23 pm

    When you decide you do want to switch funds to a cheaper fund its actually quite difficult to find a quiet day to do it

    In reality, if you are trading in unit trusts you are going to be out of the market for at least 3 days switching between funds

    I was going to switch my Vanguard developed ex UK unit trust into the cheaper new ETFs they started in May

    I originally thought 3/4th of July would be quite quiet and I would do it last week

    However I cancelled that plan last week because when it got close to the date there seemed to be a lot of turbulence in the market

    As it happened on 4th July the FTSE went up 200 points on the day because Carney and the ECB said that they wouldn’t raise interest rates as fast as everyone was predicting

    If I had have gone ahead and switched on 3/4th July I probably would have lost maybe as much as 5 years savings in lower fees through losing the daily rise in stocks 🙁

    I guess my next window for a switch will be Labour Day now…

    You need to be quite cautious about portfolio optimisation and ask if its really worth it for relatively small amounts

  • 8 Jumper July 9, 2013, 6:22 pm

    @Neverland, you are right. It is a pain.

    In a non-ISA, non-SIPP account, TD Direct Investing allow you a “trading limit” (in practice, around the total value of your holdings) against which you can purchase. In the past I have used that successfully to buy £x of one tracker fund and on the same day sell £x of another tracker fund, each tracking the same index. These net out on settlement day and because they happen at the same time, don’t leave me out of the market at any point.

    But… this seems like a rare feature. TD do not offer it in an ISA, and so far I have not found it at any other broker at all. The way around it would be to make multiple smaller switches, perhaps funnelled through a small cash float. That would work if you get free fund trades, but not at Alliance Trust or Sippdeal where fund trades have a fee. In that case you are pretty well stuck.

    Vanguard investors in the US have it so much better. Direct and contemporaneous fund-to-fund transfers, seamless (no taxable event) conversion from mutual funds to ETF classes of the same fund, sub-0.1% TERs, and a full-on retail operation that is second to none.

    Meanwhile, in the UK we have to uproot everything about every quarter to dodge specious platform charges that can be two or three times larger than the fund charge.

  • 9 The Accumulator July 9, 2013, 8:05 pm

    @ Shoestring – Great spot! I of course forgot to type in the minus sign. So you’re right, Emerging Markets are down 7.7%. Have amended the pic. Cheers!

    @ Dave – you can invest £50 a throw using the monthly investment feature.

    @ Sharkey – the £1.50 applies to regular investing in ETFs and ITs.

    @ Neverland – a TD operative told me you could get on the phone to them and have them buy your next fund before the settlement date, so you’d only be out of the market for a day. Haven’t tried it though, like you am wary of making unnecessary waves unless the win is really obvious.

  • 10 dearieme July 9, 2013, 9:57 pm

    There’s something I don’t understand about passive portfolios. Gilts are presumably going to do badly when interest rates eventually rise, as rise they must (?), so why include Gilts? And so on – passive investing seems to require that you hold your nose and not be active even in setting up your portfolio. Yet in one regard you must be active – the timing of setting up the portfolio in the first place.

    We are going to face problems as Cash ISAs mature over the next four years, and our lovely inflation-beating interest rates are not replaced. I suppose we’ll buy (largely) equities as the money becomes available, a form of drip-feeding, but I can’t say I’m happy at the prospect.

  • 11 SemiPassive July 9, 2013, 10:36 pm

    Jumper, I wonder if Vanguard will ever open a retail provider of SIPPs and ISAs in the UK?
    I have been pound cost averaging into Blackrock’s Emerging Markets tracker for the last year or so and just above breakeven, in stark contrast to Vanguard’s Developed World ex UK fund which is neck and neck with their UK Equity Income as my best two performing funds (both ahead of the FTSE All Share) heading back up close to their 30% gain level of May.
    My Emerging Markets weighting is only about 8% at present, obviously after the last year you wonder whether its even worth bothering with them over a world tracker, but medium term I guess a genuine US recovery will drag them most of them up.
    They used to be amplified versions of developed market indices, a bit like silver is to gold.

  • 12 BeatTheSeasons July 10, 2013, 9:21 am

    I notice there is no obvious exposure to the potential high growth rates of smaller companies in this portfolio, whereas I’d been under the impression that a balanced portfolio should include some of this. Looking back at the original post which explained how the portfolio was set up, I’m guessing this is down to its relatively small size.

    But I’m curious whether it’s specifically because a) you wanted to concentrate on the main asset classes, b) there is no suitable product in the UK and/or it’s an ETF and so the charges would be prohibitive at this size or c) you don’t see the need to invest in smaller companies at all. (and size what constitutes ‘small’ in any case?)

  • 13 BeatTheSeasons July 10, 2013, 9:31 am

    @ Neverland

    Hargreaves Lansdown have confirmed to me that you will get a same day valuation on a fund if you place your order before 8.00am online or 8.30am on the phone. As the funds are valued at midday that means you can limit the timeframe of your risk to only a few hours. If you choose the phone option you can see where the markets open before committing.

    Personally I try to only switch funds and rebalance when I have new money to invest so I can do the buys and sells on the same day. However, I can see how that will get more difficult over time as new contributions become relatively smaller as a proportion of my savings.

  • 14 L July 10, 2013, 9:55 am


    Are you sure that the “trading limit” is not available for Trading ISA accounts? I recall that in the past, I was able to place a purchase for a buy immediately after a sell order. I was hoping that by looking at my account history I could clear this up. However, on my last re-balance the buy trade was 2 days after the sell trade (the Settlement “gap” was 3 day). As TD’s orders are on T+3, am I correct in concluding that the “trading limit” is available on Trading ISA’s then?

  • 15 Jumper July 10, 2013, 3:27 pm

    @L: “Are you sure that the ‘trading limit’ is not available for Trading ISA accounts?”

    Not entirely, no. I used my ISA differently to my unwrapped trading account. I have a vague recollection of problems buying before moving new cash to the ISA, but maybe that only applies to annual subscriptions rather than a sell-and-buy roll over.

    In any case I no longer have to worry about TD features. I am currently moving out of TD because I find a 0.35% charge on funds unacceptable. I will miss having a trading limit, but not nearly enough to justify well over £1k in extra charges each year.

  • 16 Snowman July 10, 2013, 4:46 pm

    I do like the slow and steady portfolio idea and updates. I think it is interesting to follow through a portfolio like this over time.

    My own weighted Ongoing Charges Figure is 0.23% so I am not quite down to the slow and steady OCF of 0.18%, not that it makes that much difference!

    Sippdeal seems to have the Royal London all share tracker A class listed rather than the Z class (which seems to have the same OCF as the Z class). Incidentally I think you meant to type 0.01% difference not 0.1% difference (?). As you say the Vanguard FTSE all share tracker with its steady tracking error (0.1%) relative to the index so beating its index if you allow for its 0.15% OCF, has to be preferred, and the HSBC C class, L&G I class and Black Rock D class all share trackers have only marginally higher OCFs also.

  • 17 The Accumulator July 10, 2013, 9:47 pm

    @ Dearime – the point of gilts is to provide stability in the portfolio. Many investors would not be able to tolerate the sight of a 100% equity portfolio plunging during a crash. And we can be sure another crash will happen, unlike when or if interest rates will rise, or how fast. Sure, you have to hold your nose if you want to be diversified and you understand you have no special power to predict the markets. But let’s not get confused by the active and passive labels. You have to make plenty of decisions as a passive investor, you just don’t try to time the markets, pick stocks or believe in superstar fund managers.

    @ Beat – originally I didn’t invest in a small company tracker because there wasn’t a suitable product and I wanted to keep things simple. The small size of the portfolio meant I needed to avoid trading fees and I didn’t want to get bogged down in style tilts at an early stage – that’s the next level up for passive investing.

    You make a good point about diversifying your asset classes though, and we can now buy more funds while ducking trading fees. So we could easily ditch the four non-UK developed world funds for Vanguard’s Dev World Ex UK, and bring in Vanguard’s Global Small Cap, BlackRock’s Global Property Tracker D and split the bond portion with an index-linked gilt fund.

    I’ll give that strong consideration at the end of the year.

    Re: switching funds with new money. You still have the same amount out of the market even if you use new cash to cover your switch. Simply because the money that’s freed up by the sold fund is essentially your new cash that ends up being deployed a few days later than it otherwise would have.

    @ Snowman – thank you! Two typos in one post. It’s time to have a word with myself.

  • 18 Steve July 11, 2013, 10:20 am

    — “For now, I’m going to choose Charles Stanley Direct as the Slow and Steady’s execution-only broker. Its 0.25% platform charge is the cheapest option available for a small portfolio like this one. At that rate, we’ll hand over £28.50 per year in platform fees if the portfolio got stuck at its current £11,408 value.” —

    If you use a ssISA, I believe the cheapest is now Halifax at only £12.50 per year.

    Very interesting how the ters have come down so fast in the last year or so. I think I still have some ETFs with ters of 0.6-0.7%. Time for a spring clean!!


  • 19 The Accumulator July 11, 2013, 12:17 pm

    Hi Steve,

    Halifax don’t offer clean funds. So you’re not paying the lowest OCFs and you’re paying a platform charge. At some point in the next year or so, all brokers like Halifax will change their model to offer clean funds and in all probability will change their platform fee to compensate for their loss of commission revenue.

    Right now, you can find brokers with 0 platform charges but again, they won’t be offering clean funds and will have to change.

    See our broker table to see which brokers have switched to clean funds.

  • 20 L July 11, 2013, 12:29 pm

    Thanks for the reply Jumper. I too may move out of TD in the near future. I am going to wait and see what the environment is like in several months time. By then I hope the post-RDR madness has quietened down a bit.

  • 21 Luke July 12, 2013, 1:07 pm

    Is it possible to buy £500 of Vanguard FTSE U.K. Equity Index Fund? I thought CS Direct had a minimum purchase of £500?

  • 22 The Accumulator July 13, 2013, 7:50 am

    Luke, I think you’ve just answered your own question, but as pointed out Charles Stanley also allow for £50 regular purchases.

  • 23 Luke July 13, 2013, 1:34 pm

    @The Accumulator

    Sorry, typo on my part. I meant to write £112.50. I can’t see how you would be able to buy £112.50 of the fund mentioned when there’s a minimum purchase of £500?

  • 24 The Accumulator July 13, 2013, 9:54 pm

    £50. Regular. Purchase.

  • 25 The Investor July 13, 2013, 11:34 pm

    @Luke — The confusion here may be the phrase ‘regular purchase’. I don’t know CS Direct intimately but I presume it works the same way as other ‘sharebuilder’ services when it comes to its so-called regular investing feature.

    With Halifax Sharebuilder for instance you can put in ad hoc sums of money and buy whatever you like on certain dates at a cheaper rate. I.e. Even though it Is designed for people buying small amounts of the same thing every month, you can tweak it so it’s effectively a cut-cut-price broker. (See my demo HYP buy article as an example…)

    I presume T.A. is proposing the same sort of thing with the CS functionality for regular investing.

  • 26 Steve July 15, 2013, 8:57 am

    – ” I.e. Even though it Is designed for people buying small amounts of the same thing every month, you can tweak it so it’s effectively a cut-cut-price broker. ” —

    I can second this recommendation for Halifax. You can buy shares/pref shares/ETFs on 4 days per month (roughly once a week) for only £2.
    Originally I thought that it only worked if you had the ‘regular funding’ process activated, but this isn’t true, even though the instructions give this impression! The other advantage is their monthly low commission trading day when all trades cost £3.95. Very useful for selling/rebalancing.
    I think the only cheaper ‘sharebuilder’ option is iii which costs £1.50 but only once/month.

  • 27 reaganaut July 15, 2013, 3:48 pm

    The BlackRock tracker funds often have quite a bit of spread between their bid and offer prices. For example, BlackRock Corporate Bond Tracker D had a spread of 0.85% last time I checked (a fortnight ago).

    I don’t know exactly what spreads you faced when switching to BlackRock funds a couple of days ago, but if on average they were 0.5%, and, as you said, you reduced your TER by an average of 0.05%, then you’d only start to see cost savings after 10 years in these products. However, I hardly believe you won’t switch funds again before 10 years are up!

    Again, you may have faced a lower average spread than in my example above… but low enough to make the change worth it?

  • 28 grey gym sock July 16, 2013, 10:41 pm

    to start by being pedantic: instead of BlackRock US Equity Tracker Fund D, you could have switched to BlackRock North American Equity Tracker D, which

    (a) has a marginally lower OCF: 0.16% or 0.17% (depending on which website you believe :)), instead of 0.18%

    (b) includes canada as well as USA

    though the simpler way to include canada is to (as you mention) replace 4 separate funds with: Vanguard FTSE Developed World Ex-UK Equity Index.

    personally, i like the idea of adding world small cap and property funds, but i rather think the idea of this portfolio should be to keep it simple – for ppl who don’t think this is simple. i’d even suggest ditching emerging markets: 3 funds would be enough: UK equity, developed world ex-UK equity, and gilts.

  • 29 emanon August 9, 2013, 12:43 pm

    When the value of your portfolio reaches £20k you would need to move the entire fund to a different broker in order to re-balance the platform fee for the best money saving deal?

    The current platform fee of 0.25% with C&S you pay £28.50 a year, but that will obviously gradually climb and you will need to move the portfolio when the value reaches £20k to something like TD direct who charge a £12.50 per quarter fee. The average investor will be in it for the long run with a 20-30 year time horizon. I don’t know how you move funds or what the costs would accumulate to (could you explain this?) but isn’t it smarter to pay the fixed costs of someone like TD direct investing – at a comparative loss – with the view that long term it will be a cheaper option?

    I watched a very interesting lectur given by David Swensen ww.youtube.com/watch?v=wRdx7kVNQ_E in it he tells us what we all have come to understand. Diversify. What he doesn’t really delve into is how you diversify. This blog has gone to great lengths to discuss how costs add up over the years (which is why i tend to think fixed costs seem like a safe option i.e. the platform fee discussed, it will serve you well when you take inflation into account, correct?), i’d like to know more about diversifying. I understand it’s very personal based on how much time, risk and you see things panning out but it would be great know how each asset class will perform under different situations – a steep fall in the FTSE, a climb in interest rates etc

    So for the current climate, right here, right now a FTSE tracker seems like a nice return with less focus on the fixed income assets. But what/if/when the FTSE falls? Do you change your asset allocation at that point or stick to your guns and just rebalance (in the David Swensen lecture, he talks about this, saying that in this situation a lot of people instinctively end up chasing the fixed income assets for more security which would have gone up, they ultimately end up selling their equities when they are low and buying bonds when they are high, which is obviously counter productive to making money).

    I am in the process of putting together my asset allocations. In the above model you haven’t put too much emphasis on UK equity although there is a lot in foreign stocks so the portfolio is still made up of 66% equities and 24% on fixed income assets. What about property as per the lazy model of Davids portfolio? or precious metals? Could they be introduced so something like;

    UK equities – 15%
    Dev world – 35%
    Presicous Metals – 25%
    UK Gilts – 25%

    I’m learning as i go along but would like to understand more about deriving a good asset allocation before creating this portfolio for my ISA.

  • 30 The Investor August 9, 2013, 1:21 pm

    @emanon — Great to hear you’re making progress in your investing strategy. 🙂

    You’re asking a lot of very long detailed questions on various posts around the site, and you’re not really getting answers from us or other readers. I just wanted to clarify that I’m not ignoring them (and I presume my co-blogger isn’t) but that I for one simply haven’t got the time to answer these big long issues, unfortunately. (It’s a fight to get the time to write my two articles a week! 🙁 ) Many of the questions would take one or more entire articles to answer, and we can’t possibly answer them in the comments on an ad hoc basis.

    Most of what you’re asking has been covered on the site before. For an example, here’s an article on figuring out switching costs. Remember when looking to long-term timeframes (30 years etc, as you mention) it’s completely unrealistic to think current fees will prevail. Most of them have been fiddled around with in the past year! Some readers enjoy the challenge of always being with the cheapest possible solution, but you can spend a lot of time jumping around.

    Anyway, a bit hidden away about halfway down the right hand side bar is a search box. I think you’ll find much of what you’re looking for by typing in search terms there. I know it’s not ideal (I have a long term ambition to catalogue the articles in this site in a more logical fashion, but with well over 1,000 now it’s hard!) but it does work pretty well.

    If you’re looking for personal reassurance/guidance (which we’re not qualified/legally able to give anyway) then perhaps it might be worth you finding a good fee-based financial adviser?

  • 31 emanon August 9, 2013, 2:24 pm

    @The Investor

    Thanks for the honest answer. I know i’m a looking to get a lot of insight from the contributors and writers. I’m shockingly excited about taking control of my own finances. It’s very fresh to me and so i’m trying to live by the rule of measure twice cut once – although i appreciate personal finance is more dynamic than 2×4!

    I’ll try to keep my enquiries to a top level. Although i think a forum would go down a storm for the site

    I’m not keen on the idea of an IFA when i can slowly absorb the information myself, no one can look after my finances better than mysefl

  • 32 Grand August 9, 2013, 5:30 pm

    So I’ve set up my long term fund and at this current point in time it’s doing okay. Emerging markets seem to be dragging me down, however over the last 2 months they seem to have been fluctuating widely. The question is what next? I will keep feeding into this particular portfolio, however are there other types of portfolio’s that are a good idea to setup that are not aimed at thinking about retirement?


  • 33 The Accumulator August 10, 2013, 9:15 pm

    @ Eamon – I’d like to recommend Tim Hale’s book – Smarter Investing. This will give you an excellent grounding in UK passive investing strategies.

    On diversification, you will find plenty of ideas here: http://monevator.com/9-lazy-portfolios-for-uk-passive-investors-2010/

    When I originally set up the Slow & Steady portfolio, there wasn’t a property index fund available. Now there is – BlackRock Global Property. I personally put 10% of my equity allocation into property.

    When your FTSE fund goes down – absolutely you stick with the plan. One of the central tenets of passive investing is that investors market-time at their peril. Most people foul it up to their long-term detriment. So the point of diversification is that you have a portfolio you can trust to see you through fair weather and foul. That doesn’t mean it will always perform well, you have to hang in there during the storms, but over the long-term it will give you the result you need, if you stick to the plan.

    TD Investing as of Aug 1 charges 0.35% on funds. It will always be more expensive than Charles Stanley at current rates. Someone like Sippdeal or Alliance Trust are suitable for bigger portfolios as they charge a flat rate fee plus dealing costs. In reality the 20K mark for CS is a breakeven rate with a portfolio that never trades. The more you trade, the longer CS maintains its advantage and I wouldn’t go through the hassle of switching the moment I hit the breakeven rate anyway. Ultimately, the decision comes down to how much you’re investing. If you’re lobbing in 10K a year and CS doesn’t offer you any other advantages then, yes, you’re probably better off with a flat-rate broker from the off. Hope that helps, great to hear how stoked you are by taking control.

    @ Grand – It comes down to your the time horizon for your objectives. If I was socking away money for something five years away then I’d be 100% in cash. If 10-years away then I may well allocate more to bonds, tough as that is right now. The closer your objective the greater the chance that the volatility of equities will make you overshoot / undershoot your target. And of course, we only worry about one of those outcomes.

    @ Grand –

  • 34 Grand August 10, 2013, 10:09 pm

    @The Accumulator,

    I have an asset allocation which I aim to reach in a month or so given the amount of money I have been investing and the fact that CS charge £500 to purchase a fund. Right now I’ve to bring up my % of bonds and developed world equities. Do I think about market timing first as this seem’s logical to me or do I think about prudence and pick the safer option. I guess I already have decided what I am going to do, however I am suppose I am asking what would you do and your reasons as to why?!

    Thank you for the above post.


  • 35 The Accumulator August 11, 2013, 7:43 pm

    @ Grand – I don’t know what your situation is or what you’re aiming for and I don’t market time – this article sums up why I reject market timing: http://www.forbes.com/sites/phildemuth/2013/08/05/the-one-question-you-must-ask-before-you-invest/

    Like you my emerging markets funds are the laggards so the plan dictates that I’ll sell off some of my winners and rebalance into the losers if my asset allocation has veered off course.

    What I have just done is check the price / earnings ratios of my holdings on Morningstar’s portfolio manager. It tells me that my Vanguard Global Small Cap fund is p/e 15 (a bit toppy) while the UK is around 12 (historically average) and the emerging markets small cap is about 8 (low). I invest in one fund a month and as I haven’t reached my allocation for EM small cap this year, I reckon I’ll put this month’s treasure into that one next. Hopefully then I’m buying into the Emerging Markets at a decent valuation and perhaps the Global fund will have cooled down a bit by the time I get around to it.

  • 36 Nathan August 23, 2013, 3:28 pm

    Wouldn’t it still be cheaper, though, to buy this portfolio (or as close as you can get to it), using the old HSBC trackers but through Cavendish? It gives a total AMC (including 0% platform fee) of between 0.3% and 0.35%, whereas from the above it looks like the total AMC here is 0.43%?

  • 37 The Accumulator August 24, 2013, 11:11 am

    For smaller investors yes, but that window is closing. Cavendish and everyone else will have to start charging a platform fee in the next couple of years due to the recent FSA / FCA ruling against platforms taking commission.

  • 38 emanon September 10, 2013, 2:38 pm

    @The Accumulator

    Was just looking at the blackrock index funds for my own portfolio which i am putting together. I can’t see where you are finding these low TER’s?

    For example, the Continental Europe Equity Tracker Fund shows a list of fees that don’t match with the above

    I see a initial fee of 5%, a OCF of 0.52% and 0.45% annual management fee.

    I strongly suspect i’m looking in the wrong place?

  • 39 demeter September 11, 2013, 10:08 pm

    I’m also wondering about the Blackrock trackers, they all seem to have initial at 5% ?

  • 40 The Accumulator September 15, 2013, 9:36 pm

    Hi both, you need to find a broker that offers the BlackRock tracker D funds, and not the tracker A versions.

    Any of the brokers in the clean class section of our broker table should do the trick: http://monevator.com/compare-uk-cheapest-online-brokers/

    You may be seeing the 5% initial charge on Morningstar or on BlackRock’s site? You really have to work hard to find an execution only broker who actually charges that.

  • 41 emanon September 17, 2013, 12:25 pm

    I am with TD direct who offer the blackrock tracker D funds. However, for the purpose of keeping an eye on these funds where can we find the figures you quote?

  • 42 emanon September 17, 2013, 3:22 pm

    Vanguard Global Small Cap doesn’t seem to be available through the regular investment ISA with TD direct!

  • 43 The Accumulator September 17, 2013, 5:58 pm

    Well on TD’s fund screener for a start.

  • 44 emanon September 18, 2013, 12:54 pm

    duh! Only just used the fund screener on TD (was always using Morningstar up until now)

    I phoned TD about the 2 fund i need for my portfolio;

    Blackrock Global Property Securities
    Vanguard Small Cap

    I’m waiting for an answer. It seems the blackrock fund appears in the screener but not under the regular investment section whilst the small cap fund doesn’t even appear in the screener which i suspect means they won’t offer this fund!

  • 45 demeter October 2, 2013, 7:05 pm

    The BlackRock Global Prty Secs Eq Trkr D Acc is on the fund screener with TD.

    The VANGUARD Global Samll Cap Index Fund GBP is not on TD. TD only list Vanguard Investments UK, Limited. The small cap fund is available through Vanguard Investment Series which is available from Charles Stanley Direct.

  • 46 Emma November 2, 2013, 7:20 pm

    So I’m new to this whole investment malarky, and if anybody could spare the time, I’d like to know people’s opinion on what they would do in my current situation. I recognise that it is not qualified financial advice etc., I am just looking for external opinions.

    My situation: I’m 25, have just started my first job which pays me a good graduate salary, and am in the fortunate situation of having inherited some money a while back (c.£20k) that I realise that I should probably invest. I am hoping to add another c.£8k this that over the course of the next year, as I am currently living at home with my parents, to allow me to save the money that I am not spending on rent. £10,000 of the money that I already have is in a Barclays Stockbrokers Investment ISA.

    It would be incredible useful to have some feedback on the following:

    1) Given that I will probably look to by a house at some point in the next 5 years, would you invest all of this money into a portfolio like the slow and steady passive investing portfolio (I have read Tim Hale’s book and have been converted to passive investing!), keep it all in cash, or do some mix of the two?

    2) If you were going to invest all of it into a passive portfolio:
    a. Would you keep the £10k with Barclays Stockbrokers to avoid paying the £60 account closing fee, or (given that they have high charges etc.) would you move that 10k to another investment platform?
    b. Which alternative investment platform would you use? Alliance Trust given that I at the c.£20 k mark?

    3) Any other suggestions for what I should be doing re. investing at this stage of my life! (My dad has already persuaded me to contribute 10% of my salary to my pension)

    Would be very appreciative of opinion on any of this. Again, I know that nothing that anyone says can be taken as advice etc.

    Thanks in advance for any feedback!

  • 47 The Accumulator November 2, 2013, 8:24 pm

    Hi Emma,

    I wouldn’t invest any of the funds you have earmarked for the house in the next 5 years. I’d keep it in cash because the stock market is too volatile over the course of a short time period like that.

    If you do want to invest it all, then I agree, Alliance Trust is a good deal for that amount of money on the assumption that you’ll be adding about £8K every year. My guess is the Barclays account is costing you zero because you’re not trading? If that’s true then you might as well leave the 10K where it is, but at some point Barclays will have to change their prices because the whole industry has been ordered to be more transparent about pricing by the FCA. So keep an eye out for that in the next 12 months and switch when Barclays start to charge you. I’m assuming you’re in tracker funds already, but if you’re in active funds then you may already be siphoning off cash to Barclays without realising it. If so, I’d get out of those and into trackers.

    Well done on contributing to your pension already. Your Dad’s give you some sound advice there and you’re wise to follow it. Hopefully you’re getting another dollop from your employer.

    Among the best advice I’ve read is “Don’t raise your spending levels every time you get a raise.” Save as much as you can for house, future income and so on.

    Better advice still is to keep reading. Try the Millionaire Teacher or Your Money Or Your Life for some great ideas on the amazing life decisions you can make. Decisions that really make sense of a lifetime of investing. Best of luck!

  • 48 Emma November 3, 2013, 5:52 pm

    Accumulator – thanks so much for getting back to me.

    Unfortunately Barclays are charging me – general account charges, as opposed to dealing charges, I think that about £120 of the original 10k has disappeared over the last 2 years – hence why I am considering switching.

    In terms of keeping money in cash, do you have any recommendations? I currently have part of my savings in a Lloyds 2 year fixed rate cash ISA, which has an interest rate of 2.15% that I can top up with additional savings if I want to.

    Thanks for the book recommendations (just ordered the Millionaire Teacher!), do you have any recommendations for going about attempting to understand the property market? The thought of trying to get on the property ladder is currently incredibly daunting, and I have no idea how to start going about learning everything that I need to learn before I try to tackle it!

  • 49 The Accumulator November 3, 2013, 7:30 pm

    Right now you can get better rates in current accounts than in most fixed rate ISAs.

    e.g. 5% from the Nationwide FlexDirect account. But only on the first £2500. So you enter into a world of faffdom whereby you end up with:

    3 x Nationwide accounts @ 5% covering £7,500
    2 x Clydesdale accounts @ 4% covering £6,000
    3 x TSB / Lloyds Vantage accounts @ 3% covering £15,000
    Plus a Santander 1-2-3 account @ 3% covering £20,000 (I think you can get multiples of this account too).

    I don’t know what kind of lunatic would want to go to these lengths, but I understand they’re out there 😉

    It looks ridiculous / daunting but it’s OK once it’s all set up and means you’ve got easy access if rates rise again.

    You can keep an eye on best rates here: http://www.moneysavingexpert.com/banking/

    The Investor is the expert on the property market from an investment p-o-v. The only thing I understood before buying my first home was the kind of house I was happy living in. Things have worked out just fine by putting that above all, that and not allowing our champagne tastes to overstretch our beer money.

    Remember, buying a house is much less arcane than investing because half of the country is at it, reading about it and talking about it.

    Hope you enjoy the book.

  • 50 Emanon November 3, 2013, 8:59 pm


    This way of taking advantage of current accounts interest rates. I’m tempted to do this with the cash/bond part of my portfolio, would a person be crazy to go to the lengths of opening the current accounts for £7.5k?

  • 51 Emma November 4, 2013, 12:22 am


    Thanks again for the feedback – I am now in the process of deciding whether or not I am the kind of lunatic willing to go to those kinds of lengths or not (as is Emanon by the sounds of it!)!

    Sorry to keep taking up your time, but I would really appreciate your opinion on one more (hopefully final!) question, if possible, which is on how much of my savings I should be allocating to be saving for a house v. other things. My saving goals are the obvious (emergency fund, house, retirement, other long term – potentially kids school fees etc.), and I am struggling with figuring out whether (retirement aside, as I have already committed a certain % of my salary to my pension) I should be putting all of my savings towards saving for a house deposit (and therefore cash), or whether I should do 70% house deposit (cash), 10% emergency fund (cash), and then 20% general long term (index funds) or something like that. Any opinion?

  • 52 emanon November 4, 2013, 1:38 pm


    This is off topic a little but in line with the latest comments. I am thinking of opening up a Junior ISA for a relative and sticking a gift in the Vanguard 100% LifeStyle fund. This seems like a reasonable choice right? Having said that C&S want a min. of £500, i was thinking more like £100 – 150

  • 53 emanon November 4, 2013, 1:51 pm


    I spoke with Nationwide about the FlexDirect account, they don’t make it simple to take advantage of this 5%.

    So you can only have one account per person and you only ever earn the 5% at the end of the month if at least £1k has been paid into the account. If there has not been a deposit of this minimum amount you don’t get the 5% on the £2,500. It seems like the best way to do this is if you moved your day to day banking account into this FlexDirect which would pay you £125 a month, £1500 a year! Is that correct?? Off to break the news to Barclays if so!

  • 54 Emanon November 4, 2013, 2:47 pm

    CrazY moment over. It’s clearly a yearly earning of £125, not a monthly one. It’s Monday.

  • 55 The Accumulator November 4, 2013, 10:49 pm

    @ Emma – There are two ways of looking at it. One is to work out exactly what the longer term goal is, how much you’ll need and when, and commit the amount of your savings that you’ll need to hit that goal.

    The other is taking a punt that equities will do alright in the next 5 years, and if things go really well then you might hit your house goal a little earlier. If things don’t go well then you chalk it up to experience, accept that you’ll have to save longer for the deposit, and mentally reposition the index funds as serving a longer term purpose.

    I must admit that’s what I did. The % you allocate in that circumstance comes down to how big a risk you’re prepared to take.

    @ Emanon – Officially you can only have one account. However, it’s perfectly possible to open 3 online. I pay the £1000 in and whip it out again straightaway so it can trigger payments at Lloyds, Halifax and lord knows where else. The same £1000 must light the lights in about 10 different current accounts. I’m that kind of lunatic. Automate it all with standing orders if you want to forget about it.

    Each £2500 brings in about £8.30 a month net.

  • 56 The Accumulator November 4, 2013, 10:53 pm

    Forgot about the LifeStrategy question. You can invest £50 a month at Charles Stanley using their regular investment service.

    100% LifeStrategy on the grounds that it’s 18 years or more before the funds are needed and that junior can afford to take plenty of risk seems reasonable to me.

  • 57 Grand November 5, 2013, 12:38 am

    @TA I’ve tried to setup the £50 a month with CSD but for some of my fund’s £50 isn’t enough to purchase a unit and it doesn’t allow me too set up monthly investing, which is quite a pain as I would much rather automate the process.

    With regards to transferring funds between bank accounts that pay more interest then ISA’s, I’ve actually been thinking about this, glad to see I am not the only crazy person out there.


  • 58 Emanon November 5, 2013, 12:43 am


    You’re hardcore. I like it…

  • 59 Grand November 5, 2013, 12:57 am

    I think I will actually do this. £300 interest for the year. Then go else where at the end of the promotion… As my fixed rate isa is horrendous.

  • 60 demeter November 7, 2013, 12:28 am

    I’m still unsure how your getting the Blackrock tracker funds.

    I’ve got an account with TD and I’ve just added a blackrock D fund to the regular purchase. And its saying £1.50 reg investment charge + 0.5% stamp duty!?

  • 61 The Accumulator November 8, 2013, 6:49 pm

    That won’t apply when you actually buy the fund. TD’s system is a little clunky and shows certain charges by default that may not apply to your investment. In this case they won’t charge you £1.50 or stamp duty. I’ve been through exactly the same thing with them.

  • 62 Emma November 9, 2013, 12:34 am

    @ The Accumulator
    I’ve just opened a Nationwide Flex Direct account, and in the terms and conditions it says that you can only have one account, and that if you open another one (unless it is a joint account) then it will just cause the interest that you are paid on the initial one to drop from 5-1%. How have you have managed to get round that to have 3 accounts at the 5% rate – by opening a couple of joint accounts as well, or are there other ways of doing it?

  • 63 Emanon November 9, 2013, 10:55 am

    The 5% interest is only valid for one year too. It then goes to 1%

  • 64 Emma November 9, 2013, 12:57 pm

    @ Emanon – I know that it it defaults to 1% after a year, so i have set myself a number of calendar reminders to remind me to change it then!

    I was just wondering whether it was possible to get the 5% on more than the £2500 during that one year time period though, as at the moment I can’t see how it is, unless you open another joint account, which I am not really in a position to do.

    Also, I was wondering if you came up with a solution of what to do re. the money that you wanted to invest in a junior ISA. My nephew has just been born and i was thinking of investing a similar sum (c.£100) for him in a low cost passive fun, but am not sure how best to go about doing it.

  • 65 The Accumulator November 9, 2013, 2:31 pm

    Despite what the bank staff say and even the terms and conditions say, I have opened 3 accounts and am getting the full whack on two of them. I’ll know at the end of this month if the 3rd one pays out at the full rate too. Now, I didn’t open the first 2 accounts all at once. I opened one, let it bed down over a few months and then opened the other. It’s reasonably common that online bank account systems don’t follow in practice the dictates of the T&C theory. A number of savers were able to open 10 fully functioning Lloyds-TSB Vantage accounts before Lloyds caught up with reality and limited the number to three. Nonetheless, those with 10 accounts report they were able to keep them.

  • 66 Emma November 9, 2013, 2:42 pm

    @ The Accumulator

    Sweet – guess I’ll try my luck then! Any views on how to best invest £100 or so for my nephew via Charles Stanley direct?

  • 67 The Accumulator November 9, 2013, 2:47 pm

    I’d pop it in a Vanguard LifeStrategy fund. You get a diversified, cheap and auto-rebalancing portfolio in one hit. You only have to decide what bond allocation you prefer.

  • 68 Emma November 9, 2013, 2:48 pm

    Is there any minimum investment required?

  • 69 The Accumulator November 9, 2013, 2:50 pm

    £500 for a lump sum or £50 for regular investment. You then just cancel the direct debit after two months.

  • 70 Emma November 9, 2013, 2:54 pm

    Perfect, so I can invest 100 split over two months, and then cancel the payments but still have the fund?

  • 71 Emanon November 11, 2013, 6:25 pm


    So what do you do at the end of the year when all three expire?

    These are inspiring lengths you go to – I, like many fellow monevators I’m sure, would love to know more as it sounds like managing a financial tamagotchi…

  • 72 The Accumulator November 11, 2013, 6:29 pm

    Move them to whatever’s best at the time. Clydesdale are currently offering 4% on £3K until March 2015.

    The key to the system is that it’s grown organically 😉

  • 73 Emanon November 11, 2013, 7:37 pm

    I’m scared to ask how big and elaborate it is especially as I’m aware it help your mortgage pot grow

  • 74 The Accumulator November 11, 2013, 10:31 pm

    Hmm, just counted them. 16 current accounts between myself and Mrs Accumulator. 17th on the way. I did warn you there were some lunatics out there!

  • 75 Emma November 11, 2013, 10:41 pm

    And that’s just the current accounts?!

  • 76 Emanon November 12, 2013, 12:34 am

    Would make a very cool infographic.

    What is the average annual return you get? How do you stay on top of all the best deals going?

    Think I’m going to start off slowly and play around a little, as long as it can be all done online I’m sure it can be streamlined. Fair assumption?

  • 77 BeatTheSeasons November 12, 2013, 10:52 am

    Opening large numbers of current accounts is going to hit your credit score.

  • 78 The Accumulator November 12, 2013, 2:27 pm

    It might. It’s not stopped me doing anything.

    Don’t accept the offer of the accompanying credit card or overdraft.

    Space out your applications

    Keep a lid on things if want a really important loan in the near future e.g. a mortgage.

  • 79 BeatTheSeasons November 12, 2013, 2:34 pm

    Would be interesting to see if a current account without an overdraft still appears on your file with £0 available credit of if it doesn’t appear at all, like savings accounts.

    I never thought about declining the credit or even realised it was possible. To be honest I didn’t realise you could have more than one current account as I thought they always made you ‘switch’ and the close the old one.

  • 80 The Accumulator November 12, 2013, 2:45 pm

    To be honest, I’d forgotten how weird I was doing all this. The Investor has now reminded me of my outlier status, so I’ll do a post on it in the next couple of weeks to try and explain it. So thanks for inspiring the post!

    @ Emma – I miscounted. 14 current accounts, 6 savings accounts (not including the useless ones that are auto-generated with the current accounts), 4 Cash ISA accounts, NS&I index-linked certificates, um, the online broker accounts for equities… It’s not so bad once you tame it with a spreadsheet. Hopefully the post will explain all.

  • 81 emanon November 12, 2013, 2:49 pm

    I for one will be awaiting eagerly on this one. My spreadsheets are quickly evolving into pretty big beasts. I only have one Stocks and Shares ISA!

  • 82 Emma November 12, 2013, 2:51 pm

    Ditto! My spreadsheet management is currently appalling!

    Somewhat off topic, and I am expecting the answer to be no, but what are people’s views on whether the Amex platinum card (the one that costs c.£100 per year) is worthwhile? Or any other similar cards for that matter?

  • 83 emanon November 14, 2013, 11:47 am

    I’m about to start the ball rolling on this but as i will be moving home and applying for a mortgage in the new year i’m going to take it slow. From the accounts you listed….

    Nationwide – Flex Direct
    Clydesdale account
    TSB / Lloyds Vantage accounts
    Santander 1-2-3 account

    it appears that the biggest return is from Santander at 3% on £20k which gives £600 vs the least profitable Clydesdale account at 4% on a limit of £3k which gives £240

    So it makes logical sense to start with the Santander 1-2-3 account and if you can have 2 of those, even better!

  • 84 emanon November 21, 2013, 1:37 pm

    You can also apply for your accounts through Quidco, a cashback site. For example, they will pay you £45 to open a Santander 1-2-3 account

  • 85 demeter November 26, 2013, 2:56 pm

    The new purchases of Blackrock funds for your demo portfolio don’t include Bid / Offer spread. You’ve listed purchase price as £0, this is not the case.

  • 86 The Accumulator November 27, 2013, 2:53 pm

    Ach. Given the amount involved is minimal and that the portfolio is meant for long-term investors, I’m not going to worry about it. All the funds are subject to a bid-ask spread, it’s just hidden in the case of the OEIC’s unitary pricing model.

  • 87 Emma December 28, 2013, 12:03 am


    I’m back! Happy belated Christmas to all.

    I am finally at the point where I have got my act together and got my ISA account set up etc. so that I am able to make my passive portfolio allocations…..so am now dithering as to what allocations to make!

    I know that no one on here can offer advice etc., but I would appreciate any opinions on what allocations people would make when setting up a passive portfolio in my sitation, and how in line with the slow and steady portfolio it would be?

    For clarification, my situation is that I am 23, new to this whole investment malarky and setting up this portfolio as a general, long term fund. If it goes well over the next couple of years, then I may use some of it to put down a deposit on a flat, but I have other money in cash that I am seeing as my main flat deposit nest egg, so I am not reliant on this portfolio for that, as I understand that to do so under a short time frame would be unwise.

    Thanks in advance for any comments – I know that I really need to stop dithering and start doing, but taking the leap is proving tricky!

  • 88 Grand December 28, 2013, 4:18 am

    Hi Emma, I was in exactly the same position as you just over 6 months ago. I would highly recommend you reading if you haven’t already that is Smarter investing by Tim Hale and the four pillar of investing by William Bernstein. They will give you a good understanding of constructing a diversified portfolio and what components you should include within it.


  • 89 Emma December 29, 2013, 1:07 am

    @ Grand – thanks for your response! I have read Hale’s book and found it very useful, but am still struggling a bit with my allocations. Realistically I think I just need to man up and do something, but the two things that I am struggling with is knowing how much of my total allocation to put in equities vs other (cash, bonds etc) given I may need some of it for a house deposit over the next couple of years, and also whether to invest my equity allocation as a lump sum or not. This latter question is the one I am really struggling with, as I know the first one basically comes down to my appetite for risk.

    If you have c. £10K to invest in index funds/ ETFs is it better to do it all at once as a lump sum, or gradually over a series of months? And if doing it all as one lump sum, is there any “better” or “worse” time to do it? I know that passive investing is not about market timing and indeed is based on the premise that you can’t accurately market time, so I understand that that might be a stupid question, but I am going to ask it nonetheless……reprimand me if required!

  • 90 Emma December 29, 2013, 8:03 pm

    No advice on the “lump sum” vs “pound cost averaging approach”?!

  • 91 Grand December 29, 2013, 10:55 pm

    Benjamin Graham believed in the approach of DCA… My approach was to buy the individual funds that made up my portfolio first hand out of a lump sum much like yourself. I then add to them when I have the surplus cash.


  • 92 The Investor December 30, 2013, 2:31 pm

    @Emma – Good to hear you’re close to getting started. We cannot give specific advice to anyone, so please don’t take this as advice.

    However in general lump sum investing will usually deliver a higher return over the long-term — assuming you already have the money to hand — because markets tend to go up. Ergo, the longer it’s invested, the better the return.

    However sometimes markets go down. If that happens after you invest your lump sum, then you’d have been better to wait, or to average in.

    Nobody can know or tell you in advance which will be the best approach, as nobody knows if/when the market will fall.

    For that reason, I think whether to invest a lump sum is really down to your risk tolerance, and how upset you’ll be if you see your money fall by, say, 30%, as opposed to missing out on some gains.

    You might find this article useful:


    And this comment thread, referenced in the above (from about halfway down — comment 91 — where we begin discussing averaging versus a lump sum):


    Happy investing! 🙂

  • 93 The Accumulator December 30, 2013, 11:24 pm

    @ Emma – while pound cost averaging has been statistically shown to be that bit less efficient it’s generally much easier to cope with psychologically. Given that much of investing is a battle against your own human instincts, and that you’re new to investing, you may well find it easier to dip a toe in first. It’s also pretty common to be on the brink of investing for the first time and to suddenly find yourself unable to take the plunge. It happened to me! It’s like being on the end of a very high diving board. Deep breath…

  • 94 Emma January 1, 2014, 8:07 pm

    Thanks to everyone for the advice! Accumulator, you are very right – I am very much just dithering on the edge and know that I just need to man up and take the plunge. It is one of my new years resolutions! I think that I will probably end up drip feeding it in, as otherwise I am not sure I will quite be able to bring myself to do it!

    So that decision made, I was wondering if anyone had a recommendation for a cheap property fund? I am thinking of putting 10% of my equity allocation into a property fund (a la Tim Hale’s global tilts style portfolio) but have no idea which fund / tracker to go for, or if there even are any suitable ones.

    Additionally, I would welcome anyones views on including property and commodities in your portfolio, especially given I have noted their absence from the Slow and Steady portfolio! Is there any particular reason for their exclusion there?

  • 95 The Accumulator January 1, 2014, 10:00 pm

    Happens to everyone on the verge of their first investment.

    For property trackers check out the property section of this post:

    Commodities I would leave for now. Even Tim Hale has turned against them in the latest edition of his book. They’re good diversifiers but the actual returns are dubious and good vehicles hard to find.

  • 96 Emma January 5, 2014, 12:53 pm

    Thanks very much! Initial investments now officially made – highly terrifying stuff!

  • 97 The Accumulator January 5, 2014, 8:52 pm

    Well done, Emma. This is easy to say and harder to do, but try not to obsessively check your portfolio – ideally only every six months or so, and remember it’s a long term game! What happens in the next week / year will have little bearing on the eventual outcome.

  • 98 Emma January 5, 2014, 9:06 pm

    Thanks for that TA – I will try my hardest (though I will be dripping money into my portfolio each month, so I guess I will have to have a quick look at it all then!)

    Out of interest, if the Slow and Steady Portolio 2013 Q4 update likely to be out anytime soon? I am particuarly interested to know what you have decided re. the blow comments that you made to BeatThe Seasons earlier in the year, and if you did include small caps and property, how this would effect the overall fund allocation. I have included them both in mine, hence the interest!

    “We could easily ditch the four non-UK developed world funds for Vanguard’s Dev World Ex UK, and bring in Vanguard’s Global Small Cap, BlackRock’s Global Property Tracker D and split the bond portion with an index-linked gilt fund.

    I’ll give that strong consideration at the end of the year”

  • 99 The Investor January 6, 2014, 11:37 am

    @Emma — Update to S&S due tomorrow! 🙂

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