88% of the UK lack confidence when it comes to personal finance and investing.
It doesn’t need to be this way.
Personal finance is a set of skills that can empower you to become comfortable and confident with money.
Here are some of those skills, in today’s Personal Finance Friday.
Today, I want to share with you the details of my own investment portfolio.
I want to tell you what I invest my money in, why my portfolio looks like this, how often I add to my portfolio and what platform I use.
Hopefully, you can use my investment decisions to better inform your own.
So, let’s get into it.
What I Invest My Money In
I invest my money into a Stocks and Shares ISA. This is a £20,000 (per year) tax-free investment account everyone in the UK is allowed to have.
Before you invest in anything else, your first £20k each year must go into an ISA.
The money in my Stocks and Shares ISA is currently invested in the following:
35% -> Vanguard FTSE All-World Tracker
32% -> Vanguard FTSE Emerging Markets Tracker
15% -> Vanguard FTSE All-World Tracker: High Dividend Yield
10% -> iShares Global Inflation-Linked Government Bond
3% -> WisdomTree Artificial Intelligence
2% -> Invesco Corporate Bonds
2% -> WisdomTree Blockchain
1% -> Invesco Bloomberg Commodity
This gives me a spread of 87% in stocks & shares, 12% in bonds and 1% in commodities.
With my stocks and shares, I have not cherry-picked a single company. I find this too risky. I don’t want to plunge a load of money into Greggs only for them to fold in a year’s time (unlikely, but possible).
I have a bit of money in exciting technology that has the potential to grow a lot (blockchain + AI), but is also riskier. The sum is an amount I can afford to lose.
With the tracker funds I have invested most of my money in, my money is safe because I’m investing in a very large group of big companies across the world.
I am spreading my risk across thousands of global companies from Apple in the US to M&S in the UK to Tata Steel in India and to the Semiconductor Manufacturing Company in Taiwan.
Some of these companies may fail in the next 20 years but that doesn’t concern me. If a company folds out of the tracker fund, a new company will come into replace it.
And as I’m investing for the long run (15+ years), this suits me perfectly.
Why My Portfolio Looks Like This
Before I dive in here, I recommend reading this piece on different investment strategies.
And this piece on why you should open an ISA and not any other investment account.
These will give you a background into what tracker funds are, what bonds are, what commodities are, why you should invest in each one, why you should open a stocks and shares ISA and the various investment options available to you depending on your investment goals.
That is your first port of call if you don’t understand the first section above.
So, I invest in mostly stocks and shares (i.e., companies) because I am investing for the long run.
Stocks and shares fluctuate up and down more than bonds, but in the long run they are much more lucrative in their returns.
Bonds are just a nice counter-measure during down years to ensure my portfolio doesn’t completely crumble.
I define the long run by anything over 10 years. Over 10 years, this portfolio will go up in value, outpace inflation and give you a good return on your investment.
I can guarantee it. Come back in 10 years and this portfolio will be giving me monthly income and will have increased my money significantly.
Ideally, I am leaving my money in here for longer so I can see the benefits of compound interest and really reap the rewards of investing (read this article for why that’s so important).
This long-term view works for me and my personal finance goals, but it might not work for you.
If you need your money for a house deposit in the next 6 months then you should probably just keep your money in a high street bank.
See this article for what your portfolio should look like depending on your timelines.
To summarise, the lessons here are;
- when investing in stocks and shares, invest in tracker funds.
- always have a bit of diversification with bonds + commodities (to understand why, read this)
- always adapt your portfolio based on your time horizons for when you need the money and your investment needs
How Often I Add To My Portfolio
I invest monthly into this spread of investments.
I have a direct deposit set up from my current account (that my salary gets paid into), straight to my investment account.
I try and invest as much as I can after necessary spend and budgeting for the month ahead (for fun stuff / holidays etc.).
I also ensure this amount is consistent each month. I never allow this sum to drop below what I’ve set it at.
If I need to cutback, then I’ll cutback on my spending, not on my investments. If you want to know why, read this.
So, each month this sum just comes out of my account and gets automatically invested into this portfolio above by my investment platform.
I don’t even need to think about it.
What Platform I Use
I invest my money with InvestEngine.
It’s a really intuitive tool and allows you to set up a Stocks and Shares ISA with ease.
It’s also great because it only trades tracker funds. They literally don’t let you stock pick. So it takes any temptation to do so + any risks associated with it, away.
If you have another ISA, you can transfer it into a S&S ISA with InvestEngine and get a little bonus for switching.
I strongly recommend using them. Their fees for a simple portfolio like the one above are 0, which is really, really rare.
For a free £50 when you join, use this link (this isn’t a paid sponsorship, it’s just my personal referral code!)
It doesn’t really matter who you use, but you want to pay as few fees as possible (none, in this case) and the big investment houses usually take too much (e.g., Hargreaves Lansdowne, Vanguard, AJ Bell).
Do your own comparison here and see who wins for you.
Conclusion
I hope this window into my own investments has given you inspiration and some ideas for what to do with your own money.
Love, as always,
Max
Disclaimer: This content is for informational purposes only and does not constitute financial advice. Always consult with a qualified financial advisor before making any investment decisions.
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