How to diversify

Yeah I think you can be feeling the effect much more at the moment due to fractional shares not being available yet. Once they are out you can invest with whatever money you have and not have to worry about buying whole shares :slight_smile:

I absolutely agree with you. Live now whilst young. If there’s anything I ever want to go and do I don’t hesitate or think “Oh I’m not going to be able to save however much this month”. Numbers in your bank are certainly not more important than enjoying life and doing stuff with friends and family :smiley:

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Haha yes diversification is great, but over diversifying is pointless - after a while you may as well just hold MSCI world as you’ll hold most things anyway!
Personally, I hold 3 ETFs and 5 investment trusts. ETFs are regional, 2 of the investment trusts are Private Equity, and the others I’ve looked into their holdings and methodology and think it makes sense. I will aim for these collectives to eventually be 60-65% ish of my portfolio, with the rest as direct equity.

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Yeah I know what you mean, don’t want to replicate and not make the best use of your investment. I think I worry a little that I will get rid of a trust and see it perform better than the ones I have kept :grimacing: but maybe I am over thinking!

Something out there will always outperform whatever you have… but never for very long. If you’re investing for many decades, don’t worry about it.

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Good call sendu, I am in it for the long hall. I think because I really enjoy the whole process of it and I am reading lots I check my portfolio too much.

Green :smiley:
Red :grimacing:

Need to be strong!

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VWRL is the bedrock of my portfolio. I’m a fan of Lars Kroijer - https://www.kroijer.com/

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So with the universe boasting 5000+ entries I’m very near 1% (meaning I’m close to owning 50+ different stocks) which is about 1/10 of my final goal.

Although not equally weighted I have recently started paying more attention to markets etc and specific industries (not quite indexing component parts). I am planning to have this inform my decision making in future.

This idea came about from sustaining very, very very heavy losses in the past three months (for reasons I won’t go into here) and having a long hard think of how to avoid same in future.

Wondering how other freetraders go about building their portfolios?! Do you have a percentage you are aiming for in terms of industry or exchange? Is this something you are paying attention to? Can you think of any downsides (or upsides etc) that you want to share?

Any thoughts appreciated

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My allocation is: 40% cash (I use this mainly as an emergency funds or extra funds to dollar cost averaging in case of a crush/correction) 20% crypto, 40% equities with a mix of index funds (30%) and individual picks.

I am heavy on tech: Apple, Facebook, Nvidia, Microsoft, roblox, Amazon. Also, on energy (all renewable and risky assets, ITM and Ceres are the main ones). Then mining (greatland gold and eurasia).

For the near future I will be adding consistently every month, in terms of allocation will be almost exclusively cryptocurrencies (especially coins/tokens which support staking).

I am not specifically picky in terms of allocation (volatile assets can be a pain though) but I like to stir my assets in the direction I see the better for potential/ethics/profit.

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This is a pretty good thread:

Almost no one will beat index investments over the long term. So the easiest and most profitable way is likely just to buy an index and not stocks. But do whatever gives you joy :smiley:

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Without the slightest hint of irony here

I am really glad you mentioned joy.

The fact that I’m doing what I’m doing is probably gonna sound horrible to some “conversion to the mean” and “I got all the data” type of pukes…

but the fact that I can follow my own ideas and be responsible for what I’m doing does give me “joy” and a sense of achievement. It’s quite empowering.

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This is probably where I’m really lacking… ie allocating cash! Thanks for sharing it is appreciated

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Watch this video of Warren Buffet talking about a punch card with 20 holes: Warren Buffett's Best Advice on Successful Investing - YouTube

I think owning 500 different stocks would be way too many for me.

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@Sentinelgre

I started out buying so may stocks without rhyme nor reason it got very quickly out of hand. The freedom to buy at zero commission lured me in, the excitement of so many stocks to choose from…

After a few months I realised this was not a good strategy and slowly have been winding down the number of stocks I own and developing a portfolio strategy.

My aim is to have about 70% of my investment £££ in ETF’s. Of these half are very diverse such as S&P500, Ishares Global etc… The other half are targeted ETF’s in sectors I think have huge potential such as Battery Value Chain, Cyber Security, Robotics and Global Clean Energy. There will be some double dips with this as some of the specialist ETF companies will also be in the S&P500, Global ETF’s etc… I’m not really concerned about that.

The remaining 30% is then for me to pick individual stocks. I always want to have some stocks like this, I like to learn about companies, about investing, researching etc. and picking individual companies puts my theories to test without risking the whole pot of cash.

For the individual companies I currently hold

Lloyds
Britvic
Luceco
Rentokil
Strix
Spirent
Circassia Group
Draper Esprit
Ridgecrest PLC
Aviva
GSK
Tern
BT
Sainsbury’s
Hyve Group
Jaws Spitfire Acq Corp
Nightcap
Cellular goods
Fiverr

At the moment I am not at that portfolio split. Still have too many companies in my opinion, not enough ETF’s, but getting there bit by bit. Taking profits from some of my companies, reinvesting into ETF, that sort of thing.

That’s how I’m doing it, not financial advice at all, just my way to play…

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As a new user, I want to take this chance to invest, while the stock market is low due to pandemic.

  1. Could anyone provide any advice on which ETFs to select for a diversified long term portfolio? (10 years plus)

  2. Also, from your knowledge of other platforms. How is the number and variety of ETFs on Freetrade? Do other platforms have many more and am I missing out on a number of them by solely being on Freetrade?

Thanks

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Freetrade lacks diversified bond ETFs but does have the VWRL (Vanguard FTSE All World) which is unhedged and the IWDG (MSCI World) which is hedged.

Contrary to the title the MSCI World is not the whole world but only developed countries.

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If you only want ETFs you may be better off opening an account with Vanguard and using the equity and bond funds to build a portfolio.

@Freetrade_Team Thanks to the team for the Zoom call last night it was very informative. Adam mentioned with regards to ETFs, that the UCITS ETF Universe that are available on the LSE will be added. Can I push you to provide a time scale for this arrival as you have done for US stocks etc? I personally would like to see a more diverse selection from ETF issuers on this list:

I feel this will become more important for EU expansion and also for SIPPs when they arrive. It would be great for everybody to have the choice to broadly diversify with ETFs or to target specific areas of the market. Thanks :smiley:

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cough (non covid)

image

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Hi Adam. I’m currently invested in a few of the iShares and Vanguard ETFs you offer which are great and I feel I’m as diversified as I can be at the moment, but I’d love to see some more options from some other competitive issuers. Also some interesting factor funds missing at the moment. I’m glad you mentioned on the Zoom meeting you are planning to include them but didn’t indicate a rough ETA :sob: . Cheers

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Great to meet another ETF fan!

You’re right, we could do much better in our coverage of ETFs. I think we have the basics covered so anyone could create a balanced diversified portfolio for free.

More fixed income ETFs is super relevant right now for sure. We’ll be expanding and rejigging the stock universe in the next few weeks, and will continue to do so afterwards.

One thing we’ve noticed in the past few weeks is that ETFs with relatively low liquidity are showing unusually large spreads due to the volatility, so we’ll probably be adding the higher volume securities first.

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