Bit of a wild month. The banking world was about to melt down and take the whole financial world with it. Didn’t quite eventuate, so discipline won again. Made the contribution on the first day of the month and hoped the market would do me a solid. Split the contribution and allocated to global value and global small as there’s no costs for buying ETFs on the platform I use.
By the 9th day of the month I came very close to a milestone figure, then saw a sharp dip in the portfolio as the banking panic kicked off. So the market didn’t do me a solid, more of a wet one. One of the notable things after doing this now, for closing in on three years, is the size of the portfolio in relation to the contributions being made. The portfolio has grown to such a size that a 2% decline will wipe out the monthly contribution. I guess that’s a good problem to have, but even though my contributions are a decent chunk of savings they’re going to make a smaller and smaller dent in portfolio growth.
On other matters, as I’ve spent a little more time browsing investment forums, it’s become more and more apparent how much people need to settle on a direction up front and stick with it.
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The number of people who’ve started off with either a diversified ETF, or some weird construction they’ve pulled from the barefoot investor’s book, or something someone online told them to do, and are now second guessing everything and wondering if they’re on the right path is surprising. If it’s not that, they’re absolutely obsessed with fees to the point of being deranged, so they’re willing to sell off their portfolio to switch it into similar ETFs with slightly lower fees.
It seems to get back to having no clear investment philosophy. They can parrot a few ideas and concepts and know what an ETF is and can buy it, but don’t have any clear idea why they’re doing what they’re doing. And in the instance of the fees, of course they matter, but not to the extent you liquidate everything to save $60.
This behaviour is an indication these people probably need an adviser. The fiddling and pulling levers and pressing buttons these people will do over the years, because they never started out with a clear philosophy, will inevitably cost them. I can’t say I haven’t strayed from my initial construction, but I started with a smaller core and built outwards and I’ve been regimented. What I’ve got now won’t be changing until I need to bring fixed interest in. And most importantly, despite the performance not being amazing, I’m ahead of where I should be.
Until next month.
Disclaimer: The discipline project is a personal endeavour and should not be constituted as a financial strategy that anyone should follow. It is more a study in repetition and shutting out the noise in pursuing a financial goal, than any focus on portfolio construction. Anyone looking to build a portfolio should seek financial advice to find out which strategy is right for them, if you are a high net worth investor looking financial advice then you should consider a high net worth financial advisor who can help you manage your wealth efficiently
