Advice for long-term investing portfolio

Hi everyone,

Over the last few months I’ve been playing around with the Freetrade ISA as well as doing some reading about investing on the side.

I had started as a complete beginner, but now I feel ready to start with some regular passive investing for the long term (25-30 years). I would like to come up with some portfolio I could stick with for the foreseeable future (I’m in my late twenties) to invest part of my savings every month.

I’m finding it a bit a hard to move from the ‘theory’ to a real portfolio, especially within the limitations of the ETFs available on Freetrade, and decided to ask this community for advice on my choices so far.
Based on the reading I’ve done and looking at other people’s portfolio I came up with something like this:

42% USA + Europe
7% Japan
7% Pacific Ex-Japan
19% Emerging markets
10% Small cap
15% Bonds

Based on what’s available on Freetrade and trying to optimise using ETFs with the lowest fees, this could translate roughly to (if my calculations are correct):

54%VWRL (FTSE All World)
14% EMIM (MSCI EM)
4.5% CPJ1 (Pacific Ex-Japan)
2.5% VJPN (FTSE Japan)
8% ISP6 (Small Cap 600)
2% ISJP (Japan Small Cap)
6% CU31 (US Gvt Bnd 1-3yr)
4% IBTM (US Gvt Bnd 7-10yr)
5% SEMB (J.P.M. EM $ Govt Bond)

How does this look for a start? Anything that definitely needs to be changed? Should I include things like the property ETFs or gold at all?
Hope nothing looks too silly, thanks in advance!

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2 cents.

Investment advice is against the Community rules here.

Also, I guess it all depends on what you want - high risk, low risk, etc etc etc. Your asset allocation is your choice and noone can predict the future performance of each asset class (US govies vs JPM govies or MSCI EM vs FTSE). Sometimes bonds are moving in one direction and equities - in another. Sometimes - they are dancing in unison.

Wall Street doesn’t know what’s going to happen other than the fact that we’re in a global recession.

It’s a new new normal:

So, on the marco level, things will be flying up and down, left and right like never before, most likely.

Check out this thread and read the book:

Note, Ray Dalio’s fund has not done well this time - it’s not managed to weather this storm (at least on paper, he’s finally making losses).

As for “property ETFs”, you may want to study what goes into each of those ETFs. Apple is a different company to Netflix, but they may be bundled into the same “tech ETF” by “BigFund Capital Management”.

Also, you may want to read up more, e.g. this:

Getting started in the market doesn’t have to be daunting, though. There are ways to begin investing for the future without taking on too much risk: Both Warren Buffett and Tony Robbins recommend starting with index funds, especially for anyone young or new to the market.

“Consistently buy an S&P 500 low-cost index fund,” Buffett told CNBC’s On The Money. “I think it’s the thing that makes the most sense practically all of the time.”

You can think of an index fund as a basket of stocks with hundreds or thousands of different ones inside, explains Nick Holeman, a certified financial planner at Betterment. The S&P 500, for example, is a fund that holds stocks for the 500 largest companies in the U.S., which includes familiar names such as Apple, Google, Exxon and Johnson & Johnson.

“It’s the cheapest and easiest way to diversify your money that you’re investing,” Holeman says.

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Passive investing should be cheap and hassle-free, imho.

“I think the best way is a low-cost index fund. I do not think people really should be making individual stock picks with their savings. I think that’s generally been demonstrated to be not such a good idea. If you want to do it as entertainment like gambling — like you bet on football games — fine, but I think you’re better off in a low-cost index fund, like a Vanguard index fund.”

(He’s a book author and a former bond salesman).

Each to their own. Do own homework. This is not an investment advice.

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If I could give any advice (I think this might be OK) that is to diversify if you want to reduce risk.

Buying different assets (stocks, government bonds, corporate bonds etc) but also going further and spreading across regions (which you have highlighted above) but also sectors (financial, transport, energy etc).

But as @engineer has said it all comes down to your risk appetite but the final decision is one you need to make. The global economy is likely to contact hard and fast but there will be sectors within it that does pretty well.

Remember investing/trading and getting it right isn’t easy. If it was we would all be rich.

Great, thanks a lot for the links! Didn’t realise investment advice was against the community rules (apologies for that), but the info was useful to make sure I’m not missing anything during my considerations.

As also @krr13 mentioned, diversification is a good idea and so I guess my question could be translated into whether I’m missing any obvious ETF within the Freetrade universe that would help me diversify considerably on top of the list I mentioned earlier.

But I totally get that the specific mix will have to be judged by myself, I guess that’s part of the fun :smile:

If you have a look at the components of the FTSE all World ETF (VWRL) it covers all countries and so you are effectively doubling up on Japan, Asia Pacific etc.

You could almost remove all of the holdings except for VWRL and the Small Caps (in terms of equities) and have basically the same portfolio. Not advice but just consider what you want your risk profile to look like.

For my own portfolios, I’d like to keep things simple. So I’d agree with @hrochfor1 FTSE All World gives you a lot you need, as a starting place.

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Thanks, @hrochfor1 and @piyushsg, makes sense!

I guess I was boosting EM, Japan, and Pacific Ex-J a bit just because VWRL is 77% made up of US+Europe (according to this: https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing ) and I wanted to keep that closer to ~42% of the total.
Does this make sense or am I doing something wrong?

Makes total sense, I use VWRL as a back bone of my portfolio as well and then make individual plays depending on geography and business etc.

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