Posted 20 hours ago

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

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Note, we’ve used a money market fund in place of cash, but high-interest savings accounts will do just as nicely. Also notice the common portfolio trope of splitting your bond allocation 50/50 between nominal bonds and their index-linked cousins. The nominals typically do better in a recession but get battered by soaring inflation. Meanwhile index-linked bonds have anti-inflation features built in. I think these rules are a bit crude: I’m 56 and will start withdrawing money in the next three months We work with an amazing group of client firms who sit at the forefront of the financial planning profession in the UK and elsewhere, including 22 of the 65 CISI Accredited firms.

Review: Smarter Investing by Tim Hale - Monevator Review: Smarter Investing by Tim Hale - Monevator

The benefits are extra diversification and yield, though Hale emphasises the importance of ensuring global bonds are hedged to Sterling. (There’s no point taking on currency risk in the portion of your portfolio that’s meant to cushion you against volatility.)Short-dated means holding bonds with maturities of between one and five years. That way the losses you suffer will be staunched in comparison to longer bonds in the face of interest rate rises.

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

The main problem I can see is that historically, bonds are meant to spike up when equities tank, significantly reducing volatility. However, they just can’t do this any more as they are so highly valued already, particularly if the duration of bonds held is lower. I am my own worst enemy when it comes to tinkering/active investment decisions, Tim Hales nails this aspect in his book.

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Valiant — As @Tetromino says there’s a new edition out in a couple of weeks (see: https://amzn.to/3YfLsPu) and @TA has already had a look. investing is “pay-offs you can survive with, along with chances of achieving them that you can live with” Much of the material, structure, and guidance remains unchanged because, like passive investing itself, the book has stood the test of time. Textbook execution Of course, nothing is certain and Hale’s underscoring of the investing vagaries is one of the great favours he does DIY investors. It’s a graphical insight into the havoc that financial repression and inflation can wreak upon bond investors – a topic with particular resonance today.

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