Do you have a planned investment strategy?

Now before I start, this is completely my way and in no way should be taken as gospel, do your own thing folks :joy: just a disclaimer.

Was listening to a podcast today with Paul Merriman, and his aruguments, compelling given his numbers to back up his data, that a simplistic portfolio is the way to go for long term returns.

My planned strategy on a monthly basis.

£100 into the S&P 500
£100 into another ETF of my choice to diversify

And £200 into dividend stocks, growth stocks and spec stocks of my choice each month.

If the market falls I will look to increase my monthly outlay to £500/£600

After listening to Paul Merriman I think I may be making it too complicated, what is your own investment strategy?

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That does sound quite complicated, and potentially randomly weighted in terms of the diversification.

The typical way of coming up with an investment strategy would be along the lines of:

  1. What % do I want in equities?
  2. Of my equities, what % do I want in index trackers?
  3. Of my index trackers, what % do I want in each of the different markets (countries or perhaps fields, if splitting things up in a non-traditional way)?
  4. Of my non-index trackers, what’s the maximum percentage I want to risk on a particular company?

A truly simple strategy that could work well for the majority of (young) long term investors works out like this:

  1. 100%
  2. 100%
  3. 100% global
  4. N/A

And so in Freetrade you’d just buy VWRL and be done with it. Doesn’t get simpler :wink:

The market is always fluctuating. When do you know it has fallen enough for you to change your outlay?

Saving money you could invest now, to invest later, is a form of market timing. Market timing can’t really be done successfully. Time in the market beats timing the market.

That said, if you want to have money available to do additional investment during a market crash, the recommended approach would be to just keep a % of your investment as cash or bonds, and rebalance once per year. This way you don’t have to know or predict if the market has gone down “enough”. You just blindly rebalance, which, during a crash, will involve selling bonds to buy those cheap shares.

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The % allocation seems a bit arbitrary but I do think you should have a detailed strategy to follow, mainly how to pick stocks, max % risked per company or sector and when to sell. I’ve developed mine and stuck to it for the last 10 years

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One way to play your strategy:
• £150 Global etf monthly

Then £50-£150 each month building up in pots (cash). After 3-6 months make a stock purchase, or two stock purchases… repeat the savings process and buy whatever is cheap every 3-6 months.

£75 for six months is £450
£150 for six months is £900

This way you are investing regularly and semi-regularly plus always having cash aside building up to make any type of investment purchase you wish.

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Thanks for the replies. I’m totally conflicted on what strategy to take, I understand there is more than one way to Skin a cat!

A hybrid portfolio is something I keep coming back to. So would align with your idea of tracking a global index whilst at the same time investing into individual stocks of my choosing depending on the financials.

Is a hybrid portfolio something you implement. Having been on reddit looking at this it seems like you are either an “Index Investor” “Dividend Investor” “Growth Investor” joining the two or more strategies together in one portfolio is akin to supporting two football teams from the same city on there :smile:

In answer to the question, yes. Personally, I’m taking the core-satellite approach with a big proportion of my portfolio in passive funds.

I like being able to run satellites, such as a high-yield portfolio (HYP) of individual shares. It allows me to learn while relatively safe in the knowledge that it if it’s a disaster, I haven’t gone all in.

I think this thread raises a crucially important point.

It is surely best practice to decide on allocations first, without considering the merits of specific securities. As an example, within my HYP, I even look at the weight I want to give sectors, eg banking, then screen stocks against my pre-determined criteria and select one or two that best fit.

I worry that too often newbies have no real strategy in place, pick stocks on little more than a whim and seem to overhaul their holdings every couple of months as a result. After all, if you’re buying and selling positions in the short term, you don’t really have a strategy by the word’s dictionary definition.

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Great points! I’ve been listening to podcasts, listening to investing books on audible, YouTube videos, forums, trying to grab as much knowledge as I can before I start.

I’ve got my notes full of simple and basic principles I must adhere by to keep me on track, and most importantly to keep me as emotionally stable as possible for when a downtown arises so I can think clear.

I would never think of owning more than 5% of one stock, or even 20% of an individual sector for that matter. My whole mantra is going to be diversification, and no doubt I’ll have some winners and losers but by having a plan I hope I can come out at the other end with a healthy return.

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I think you’re on the right track, especially in terms of devouring as much knowledge as possible. There is, of course, an element of learning as you go. My first foray into investing in individual companies was more or less a disaster. However, having a proper strategy allows you mitigate against yourself!

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Glad someone else is feeling this. I am very guilty of being without a strategy at the moment. 90% of my investment is in ETFs and bonds, with about 10% being in individual shares that I have researched and believe to be good investments but with no real connection to a long term strategy.

I am young with a fairly small income (freelance with a part time ‘day job’) and am torn between investing as much as possible in growth stocks for the future or buying heavily into dividend stocks in the hope of being able to supplement my variable freelance income in the future.

For now, I am just trying to get my money working as effectively and as broadly as possible in the hope that over the next few years I will have a clearer idea of a long term strategy.

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Currently my aim is to invest the £4k a year into my LISA as hoping I’ll eventually be able to buy my own place, and am currently looking to invest £500 min into FT at the end of this month :smiley:

Other than that I’m currently putting £100/pm into Nutmeg until I’ve met the criteria for my promotional bonus, after which I’ll either be splitting that money between my LISA & FT, or just one or the other.

Any extra money I’m putting into ETFs and individual stocks via FT, while slowly paying off my 0% CC (which I will pay off in full once the promotion runs out and get a new one).

In all honesty I really need to start spending less & earning more so that I’ll have more money to invest - it’s addicting :grin:

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