Smarter Investing: Simpler Decisions for Better Results (Financial Times Series)

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I remain puzzled that retirees are advised to increase their bond allocation because they cushion the portfolio and are less volatile than equities. Although I can tell you it it has commendably been updated to mention Bradley Wiggins and Chris Froome’s Tour de France victories.

Smarter Investing - Pearson

Hale sets about dismantling the case for both with the speed of a bomb disposal officer who wants to get home in time for EastEnders. Also notice the short bond selection that acts more like cash and limits the portfolio’s susceptibility to inflation and rising interest rates. This experience has provided a unique insight into the struggles that most investors face, an inside view of good and bad practices of the industry and a determination to share this knowledge through his consulting and training business, and this book. I just had a look at performance of the two funds over a 5 year period and one seemed to be up 11% and the other (the gilts one), down 26%. Moreover, the supposed benefits of complexity often prove illusory and there is nothing wrong with keeping things simple.In it he lays out the theory and evidence and practical guidance for investors looking for a simple, yet robust and sensible, way to invest. Use it to reset yourself to factory settings whenever you find your mind or portfolio is cluttered up with investing clag. 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. It largely stems from over-estimating the annual amount we needed to live on; and not fully appreciating the intent of sub-diving this into ‘essential’ and ‘discretionary’ spend. That way the losses you suffer will be staunched in comparison to longer bonds in the face of interest rate rises.

Smarter Investing by Tim Hale | Waterstones

For a variety of reasons I then decided to take my DB early once it provided enough to cover, at least, the ‘essentials’ .It also matters that gilts have low correlations to equities so when equities crash the diversifying potential of government bonds tends to come to the fore. Two points – William Bernsteins piece above gives his rationale for staying away from long-bonds (and this was before the current environment of QE). Most investment books offer a bewildering array of complex strategies for how best to invest your money. The arguments and sources are all there, and some more detail on the theory which I thinks he says is optional. To my mind, the comments you make in the key takeaways section are probably more important than the sample portfolios themselves.

Smarter Investing: Simpler Decisions for Better [PDF] [EPUB] Smarter Investing: Simpler Decisions for Better

On the deaccumulation example I wondered if there was a reason why the cheaper BCOG wasn’t suggested for the commodity allocation.At the same time, they tend to minimise the risk of disaster (financial or otherwise) happening to them. However, if Total Bond Market funds were more prevalent in the UK (as they are in the US) then I wouldn’t have any objections to getting a small dose that way. Meanwhile the investment psychology of a retiree living off a chunky defined benefits pension who’s managing an investment portfolio for fun money and legacy may have more in common with 100% equity flyboys than a normal decumulator.