So today’s post is starting out as a much shorter quick one given the week and various other personal commitments that I have had – however I thought it worth sharing for people to laugh at me!
I’ve always been trying to pick my own stocks, from investing starting over a decade ago, and even when I was a small kid (how many 8 year olds do you know who read the FT and went through the share prices to check their fantasy portfolio?! :)) so it is something that I really enjoy. I will be honest, it is starting to get better. My first few forays were not good – I lost everything on Northern Rock (granted I didn’t put a lot in, and it was after it had already crashed so mentally I knew it was a gamble). I’ve lost money on others, but doing those was educating myself (buying a stock a mate recommends? Yup – lost money there as well) which means I got back into making sure I did more and more research before purchasing something (what, you mean a name you like isn’t just enough?!).
Think of a mistake you have read in a book, blog or heard on a podcast? Yup, I probably made it. The flip side is that I now seem to be doing quite well as I have learnt over time, and am still learning (rebalancing my portfolio in the summer of 2017 means I have lost out on an approximate 20% increase in BLT). I constantly look at the prices as they go up and down, and love seeing the dividends roll in. This could just be the bull market of course, who knows.
So why do I say I should invest more in trackers? Firstly, the volatility – of course this depends on what you are tracking, but I can’t think of much (ignoring crypto currencies!) that would contain that high a volatility. As my portfolios have grown in size, this means my individual share holdings are getting larger and larger. It got to the stage that I had to split my my approach, rebalance and get more investment trusts and trackers simply as I wasn’t comfortable with the amount of holdings of individual shares I had.
With the GTP ISA it is now pure tracker for my investments (I don’t count the cash experiment) – into VWRL on a fire and forget approach.
So with the increase in the use of trackers, what have I noticed?
Firstly, I don’t pay as much attention to them. Yes, I am buying VWRL every month and I know roughly how much it goes up and down, but nothing on a par with what I do for the individual stocks.
I don’t take it personally if the trackers go up or down – it is just doing what the market does. With the ones I choose I have the usual emotions – should I sell, did I make a bad choice, how long do I wait for etc. It doesn’t matter what I tell myself when I bought the share, the emotions are still there.
Whilst I love seeing my overall retirement savings continue to rise over time, I don’t feel any special “relationship” with the trackers. It has completely removed any emotion from it, and as such has meant I worry less and less about it, just as long as my investments trickle in. I will continue to do some form of selection but I am limiting that within my portfolio.
What do I take from this? That the best way to build the nest egg is not to try and time the market, select your shares etc. but just simply shove it into a tracker (or potentially a good Investment Trust) and forget about it.
So if you are happy to get rich slowly, and without stress or worry, setup a direct debit, buy a tracker fund/ETF and just forget about it – enjoy your life now knowing that you are also building your future.