Hail Hale!

Having just finished Tim Hale’s book,  ‘Smarter Investing‘, I could say that I wish I’d read this before I’d started my own investment journey.

But actually, I won’t.

How is one to learn without making a few mistakes along the way?  Perhaps it’s easy for me to say this because the mistakes I’ve made thus far haven’t been costly.

I have enjoyed bumbling my way through FI blogs, investment and financial websites this past year, doing my own thing.

What Hale’s book has done is confirm that I’ve done some things well and other things not so well and it’s put me on the right track to correct the latter.

Anyway, here’s a well written review of the book.

Back To School

At times, I did feel like I was reading a textbook back at school, my eyes glazing over a bit and I was half expecting an exercise or question to work on at the end of each chapter!

However, most of it was written in a friendly, informative way.

Takeaways from the Book
Useful snippets I’ve gotten from the book include:
  • Diversification is not all about better returns, it’s about risk reduction
  • Ignore short-term market noise
  • Build a “portfolio for all seasons” 
  • Stick with your portfolio mix

Anyway, here’s what I came up with for my ‘Portfolio For All Seasons‘:

Current Allocation vs Target Allocation for my “Portfolio For All Seasons”

As you can see, my current allocation is totally skewed towards the UK (‘home bias‘ at its worst!) and I have some rebalancing to do, which I’ll either do by investing cash in funds that need more allocation or switching a couple more funds.

The allocation is still pretty aggressive (90/10 equity/bonds) but I’m planning to stick with it for a few years, or rather, stick with it once I’m at my target allocations.

In this post, I listed all the various funds I’ve invested in – my portfolio was described by one person as ‘crazy’ and I guess it is!  My next investment post won’t list each fund, it’ll be a variation of the above portfolio mix table because that’s all I really need to update and keep track of, to ensure that I’m sticking to my plan. Perhaps a comment on particular funds I’ve invested in during that month or a note of how much my portfolio has grown (or not, as the case may be).

Also, I think I’ll include my shares under the ‘Domestic Equity’ bracket, even though it seemed like Hale only mentioned having funds in the portfolio.

Sensible Investing

Hale also points the reader to SensibleInvesting.tv, which provides lots of great videos about passive investing, featuring the likes of John Bogle, Rick Ferri, Hale himself and others (whom I hadn’t heard of before but that’s not unusual!)

And the final good bit of advice from Hale?

  • When the going gets tough, choosing to do nothing should be the default strategy
All in all, an excellent reference book which I shall be reading again to ensure I don’t deviate from my plan!

10 thoughts on “Hail Hale!

  1. Hi Weenie,

    Tim Hale's book was the first book I read on investing and although I found it interesting and it gave me ideas on how I wanted to invest, I did find that some parts were slightly boring!

    I found that in some parts he went into a lot of detail which I must admit went over my head a bit! I like my investing to be simple and nothing too complicated.

    I still think its a good book and I do like his allocation suggestions but like you, I am fairly bias to the UK at the moment.

    Looking forward to reading more posts about your investments and how you go about re-balancing your portfolio.

  2. Hi Mrs FF, I think there was a section that I skipped completely as I didn't think it was relevant to me (hedge funds I think and some other equity). I can't say that I understood all that I read but I understood most of it and will surely have an even better understanding when I read it again at some point!

    I'm looking forward to re-balancing my portfolio, so will keep you updated!

  3. Hi weenie. Thanks for reminding me that I need to look at "Smarter Investing" again. Like Mrs FF I read it early on, when I had just started thinking about how to get myself organised for early retirement. I'm sure I'd understand it a lot better now.

  4. Hi Cerridwen, the book gave me a lot more focus – I have a much clearer idea of what I want my portfolio to look like now! Hopefully, your ISA transfers will be all sorted soon, so you can start organising your portfolio too under the book's guidance!

  5. My husband devoured this book and is on his second read – this time making notes – and now seems to have a clear path of where he wants to take our investing. I have to read the book now to make sure that I agree with him!! 😉

  6. Hi Laura, I was making notes as I was reading but fully intend to read it again. Good luck with it and hope you and your husband agree on the same things!

  7. Thanks for the summary, this is next on my finance to read books – I'm really looking forward to something that is more UK based, as I've been reading mainly American books.

  8. Hi gfc, I haven't read any other investing books but have read lots of US blogs about investing and yes, it's great to be reading things with a UK bias. Thanks for stopping by!

  9. Your allocation looks good as long if you’re okay with the 90% stock holding. I’ve not read the book but I assume it lists the volatility that the different allocations to stocks / bonds have had. (In the US that’s a worst year of -40% in value and a best year of 50%)

    If you have individual UK shares, then you’d include them under the percentage for domestic equity…and you’d probably want to limit their size e.g. no more than (say) 10% of your total 15% allocation to domestic equity will be individual stocks (meaning that your total portfolio would contain only 1.5% [10% of 15%] of individual stocks).

    The longer I’m investing, the more I’m simplifying; I’m down to a three-fund strategy in my retirement accounts (Total Domestic stocks, Total International stocks and a Total Bond fund). I have a small amount of REIT funds too which I’m reconsidering.

    The ‘Total’ funds include small-cap & value stocks so I personally don’t add any extra small-cap or value stocks. But do check the makeup of your fund holdings; if your domestic equity funds already include small-cap stocks and you own a dedicated small-cap fund, you might have more exposure to small-cap stocks than you want.

    • Hi DL

      Thanks for the insightful reply. Yes, I’m ok with 90% stock holding. The book actually recommends a ‘safer’ option, ie more bonds but while I wasn’t too sure about going 100% all in equity, I’m fine with my current allocation.

      If I include my UK shares, then the domestic percentage comes out at over 20%, a little higher than I want really but I’ll have to see how that goes since I’m trying to grow my dividend income via UK shares.

      As I’ve mentioned to others, I’m still pretty new to investing so happy to spend the time working on my portfolio. However, I believe that furtheron in my investing journey, I too will want to simplify and will probably end up lumping some of the funds together.

      Cheers for the heads up re small-cap, I’ll check them out.

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