What caught my eye this week.
A reader prompted an email discussion with my co-blogger The Accumulator about what the £1 million pension lifetime allowance (LTA) meant for where you should hold your different asset classes.
The reader said he thought bonds should go into his SIPP and equities into his ISA, since there was a lower chance of the total return from bonds eventually pushing him up against the LTA. In ISAs, of course, his equities could grow indefinitely without any such fears.
Interesting and novel idea, I thought, albeit a rich person’s headache to have. The Accumulator was less convinced. We kicked about various pros and cons.
I also thought about this when reading a White Coat Investor article this week on these sorts of allocation decisions (albeit in a US context).
Because as much as I like discussing investing minutia with my co-blogger, I agree with the White Coat Investor that getting things approximately right is infinitely preferable to being paralysed by attempting to get them exactly right.
“The truth is that investment management is probably the least important aspect of your financial success and certainly the easiest to automate.
Maybe it’s okay to quit trying to optimize it (especially since nobody really knows the optimal asset allocation a priori) and just get something reasonable done.
You can certainly save yourself a lot of hassle and advisory fees that would help make up for any under performance issues.”
I often get emails from anxious readers who’ve been wondering for half a year what platform to use to begin investing £50 a month on, or something similar.
It’s great that they’re paying attention to costs and consequences. But at this level it’s far more important that they just get started.
Have a great weekend!
Cashing in a final salary pension is just the first decision – Monevator
We had a big debate about inheritance tax, in case you missed it – Monevator
From the archive-ator: Long-term returns from alternative assets – Monevator
Note: Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber.1
FTSE 100 chiefs earn 100-times the average wage – Guardian
Electric vehicle growth is already shaking up the metals markets – Bloomberg
‘Big Short’ fund manager says financial system is safe [Search result] – FT
Check your pension is not accidentally over-exposed to equities after the long bull run – Bloomberg
Products and services
Where to save as bank account interest rates edge up – ThisIsMoney
Investors turn to AIM stocks for inheritance tax savings [Search result] – FT
Film and TV investment flops under fire [Search result, on EIS schemes] – FT
Student Loans Company is a ‘nightmare’, say graduates – Guardian
Cheaper rates for £35bn of remortgages due in next two months – ThisIsMoney
If you own Co-Op bonds you need to act now before ‘haircut’ – Telegraph
Emerging markets are now more exposed to finance and tech [Graph] – Templeton
A quick look into A J Bell’s passive fund-of-funds – DIY Investor
Cheap Blackrock hedge fund has doubled its assets in six months – Bloomberg
Understanding Bitcoin and other crypto-currencies – Musings on Markets
Comment and opinion
Investors should embrace the power of doing nothing [Search result] – FT
Indexing isn’t just for quitters – Pragmatic Capitalism
A cashed-up employee can fire their boss – SexHealthMoneyDeath
Stop thinking in terms of black and white, or in or out – Irrelevant Investor
Time scarcity and the allure of more – A Wealth of Common Sense
An interview with Vanguard’s new Chief Investment Officer – Denver Post
Winter is coming for overvalued growth stocks – The Value Perspective
The first rule of investing is… – Abnormal Returns
Stock pickers need arrogance and independence – Gannon on Investing
Early retirement could be bad for your brain [Two months old] – LifeHacker
Seven tips for a new hedge fund manager today – Nicholas Kapur via LinkedIn
Commodities and a diversified portfolio [PDF] – Gerstien Fisher
Off our beat
The new Tesla Model 3 has no competition – Futurism
The cult of the line: It’s not about the merch – New York Times
Men will lose the most jobs to robots, and that’s okay – Wired
Kitchen sponges are festering germ dens – Ars Technica
Cannabis company buys Californian town to build pot-friendly outpost – Bloomberg
“It is actually quite easy to be a great investor. Have faith in capitalism; there may be stormy weather at times, but capitalism is a pretty effective system for creating wealth. Own global capitalism by owning a global market tracker that puts as much of the market return that it generates in your pocket, not someone else’s.”
– Tim Hale, Smarter Investing
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- Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [↩]