Paul's Insights: Investing Your Way

December 2017

Investment is a very personal thing. It is all very good and well for people like me to provide opinions about investments and investment strategy. But, at the end of the day, it is our investment time frame, goals and, in particular, attitude to risk that should determine our investment plans.

One thing not spoken about enough is the attitude we have to our money. For me money is not a collectable, something I add up and look at with pleasure. I have little interest in building a vast pot of the stuff and being the richest person in the graveyard. So, for me, the function of money is its ability to allow my family and I to have the financial security that we want and a predictable amount of income to make the choices we want to make. Our choices are reflected in our long-term financial plan. This all sounds very dull, but as well as eating and paying bills, our plan includes holidays, nice red wine, fun meals out with family and friends, not to mention my love of sailing.

So, we have a pretty clear view on the number of dollars we need each year. For the last 40 years, these have come from our jobs. But now the kids are independent adults (well, most of the time!), and the fact that both Vicki and I are in our early 60s, our work dollars are declining, the role of investment dollars is increasingly providing us with the money we plan to spend.

“So what?”, you may be thinking. Well, another place we are all different is whether money is a job, a passion, a hobby, a vague interest, or of little interest to us. This may sound a little odd for a so-called “money expert”, but while I am broadly interested in our money, I am just not interested in things like share selection or fixed interest for that matter. To do this well is too time consuming for us. Sure, I have a very good grip, as does Vicki in terms of where our money is, the risk in our portfolio, and the asset allocation of our portfolio. But that is about it. 

If you love to spend a heap of time researching shares and so on, good on you. But that is your thing, not mine. This, of course, is what I love about InvestSMART. It does not dictate how, when, or why you invest.

A suite of investment tools

The one common place for many of us who use InvestSMART is the free investment insights from the team and portfolio manager (PM). This is a no brainer. Along with some 60,000 other people, I use the PM to help me keep track of my investments. You don’t have to do this, but what I enjoy here is the genius of modern technology. As the system knows what I have, it does not bombard me with stuff I do not want. If I list, say BHP on the PM, I can access all the information done by the InvestSMART analysts about BHP and the same for my other investments.

As I said earlier, we are all unique. I am quite happy to hold shares like BHP individually, but to be frank I have neither the time nor interest in keeping an eye on the shares of the future, small companies. Nor would I pretend I can select and manage offshore shares without a lot of time and effort. If I loved doing this, I would be into it.

InvestSMART can help here with its subscription services. However, while I want to take advantage of the pool of experienced talent at InvestSMART, I am not poring over reports and then buying shares in smaller companies. I’d rather go sailing. Of course, I want exposure to these shares. They will be the big companies in time to come.

So last month I went online and looked at the InvestSMART Australian Small Companies Fund. In this case I was investing via my self-managed super fund, so I popped in my TFN, did the ID check, the amount I wanted to invest and, hey presto, a few minutes later I had an email confirming my investment (Watch Video).

A quick bank transfer and it was all done. How good is that? In about 10 minutes, I had added to my portfolio a professionally managed portfolio of shares in small companies, requiring no effort on my part. I will get the benefit of holding these over the longer term, while I am sailing.

Fees are a drag on investment performance, and I didn’t want to pay the 2% plus per annum retail funds can charge. With the InvestSMART fund, the annual fee is a very competitive 0.97% a year, plus a performance fee. This fee I am happy with. It only cuts in at the greater of the S&P/ASX Small Ordinaries Accumulation Index and the Reserve Bank’s official cash rate in each 12 months to June 30. So, unless the analysts at InvestSMART do better than the Small Ordinaries Accumulation Index, there’s no performance fee. Seems fair to me.

But, the point here is that InvestSMART puts you in charge. You invest how you want, not how I or anyone else wants you to invest. You can use the free tools including their Portfolio Manager.

If you want to DIY, go for it. For a nominal fee, you can subscribe to their premium Research & Advice plans, which gives you access to the insights of more than 20 analysts, licensed financial advisers and wealth experts to build and maintain your own investment portfolio.

If, like me, you want to do some yourself and some using professional managers, no problem. If you want professional managers to do it all for you, again, no problem. 

Even better, everything is available to you 24 hours a day. You don’t need an appointment, parking, or to pay high fees.

I call it “Investing Your Way”. Give it a try.