Hi there and welcome to my first post as a value investor.
If you've read the Asset Allocation and Portfolio Management eBook, you'll already have an idea of who I am. My name is Sally and I'm going to share my progress on this blog as I invest my savings of $110,000.
I'm kicking myself for waiting so long to start investing but you live and learn. Knowing what I know now about the laws of compounding I wish I'd had the confidence to start this years ago. But never mind, I'm here now. I can't wait to plant my acorns and hopefully, watch them grow into mighty oaks.
I have been given a STRIDE global subscription for one year in exchange for total transparency in how I manage my portfolio. I will invest solely in businesses that the platform recommends and report my experiences, warts and all, on here.
Scott, one of the founders of STRIDE, is my better half. It's practically killing him that he can't give me advice on which stocks to select for my portfolio, but that's the deal I offered when I agreed to take this project on: it has to be all me.
- Use my own money to populate and manage my portfolio using the STRIDE platform
- Select all my own stocks without any outside help
- Write a post at least every two weeks letting you all know how my portfolio is doing
My reasons for investing are pretty standard. I would like to retire early (wouldn't we all?) and I'm going to need more money to make this happen. I'm a working mum with three young boys to consider. I want greater financial security for my future and also to help my boys, if necessary, with further education costs. I have no ambition to own a yacht or private jet, but never say never.
I simply didn't feel confident enough to start investing sooner - my mistrust in the financial industry certainly played a significant part. (Another STRIDE eBook covers the layers of confusion I encountered brilliantly - Deliberate Confusion Behind the Stock Market.)
Another rather uncomfortable factor was the lack of female voices in the sector, when I began researching investment options in the nineties. I found the male financial advisors I spoke to patronising and dismissive of my personal goals and concerns. They wanted me to hand over my cash like a good girl and let them get on with their big man jobs; investing my money in ways I probably wouldn't understand and frankly, as a woman, didn't need to.
That was twenty years ago and things have changed a lot since then, I'm pleased to say. But between the exasperating jargon and misogynistic attitudes I encountered, I became a buy-to-let landlord rather than trust a financial advisor or invest in the markets myself.
When I first started with my tax free savings, everything was about PEPs, TESSAs and NSIs. Then along came the ISA in 1999, replaced with the NISA this year. I have worked as a freelancer in various journalistic, marketing and PR roles, with the stop-start salaries to match. I saved what I could, when I could - highly variable amounts in line with whether it was a 'champagne' or 'beans on toast' month.
It has taken me a long time and two property sales to accumulate my savings so I don't embark on this value investing adventure lightly. I do expect decent returns - ideally 15-20% annualised - but I'm happy to put in the work and exercise the patience needed to achieve them.
I've read all of the STRIDE eBooks plus a number of others on the subject of value investing. I feel prepared and can't wait to get started.
In terms of risk, I've decided I'm a bold investor. This profile is due to my attitude to risk rather than any reflection on my experience, or lack thereof. Anyone who knows me will attest that I have never had a problem with taking considered risks.
I will be investing in businesses spanning large to micro cap. I will check my portfolio regularly to see if I need to take any actions. Because my portfolio is going to be classed as 'high-risk', I expect to see some volatility. I think I'm prepared for it, but I'll have to let you know at the time how I feel, sitting on my hands, as those share prices go up and down. The most important thing to remember is that this project is long-term and I want to trade only as necessary in order to keep my fees in check.
My Asset Pie
STRIDE covers 127 global markets, so the businesses it will recommend to me based on my bold investor profile could be from almost anywhere around the world. There are trading restrictions on certain markets - such as Pakistan, where you can only trade using a local on-the-ground broker - so I'll be avoiding those.
I'll be trading through Banque Heritage (a fortunate arrangement made on my behalf by Scott - there's nothing in the rules preventing me utilising his contacts for the best trading option!) This means that I am able to buy and sell shares in 35 global markets, currently the most markets offered by any bank.
I went for this so that I could take advantage of as many opportunities as possible flagged by STRIDE. This exceptional service does mean my fees are relatively high compared with other banks, a factor I have to consider when deciding the number of slices into which I carve each section. I am using this cost both as a carrot to encourage me to do my homework in selecting the best stocks in the first place, and as a stick to deter me from trading too often.
All the stocks in my portfolio are long-term investments. STRIDE recommends holding everything for a minimum of three years and that is exactly what I intend to do. I've read too many stories of novice investors getting cold feet when something on their portfolio takes a dive and selling at a loss. I am confident in the STRIDE engine recommending fundamentally sound businesses that pay off in the long-term, despite any short-term downs.
If a consider sell comes up unexpectedly it will be because that stock has risen a great deal or something terrible has happened. So if I do decide to sell anything before the third year, either the profit will more than cover the fees or I'll be booking a loss. Let's see how it goes. To make the most of the fabulous effects of compounding, I will be reinvesting any profits I make for as long as possible.
The Little Acorns Portfolio Asset Pie
STRIDE's cash calculator says I need to keep $25,000 back as cash or equivalent. So I'm keeping $10,000 in my online savings account and putting $15,000 into Government Gilts
I wanted to put my $10,000 fixed income allocation into REITs. But, disappointingly, STRIDE does not recommend any right now, due to the property market across the world recovering to a position of strength. So I'm now thinking of adding this to my equities section. While it adds to my risk, it also adds to the potential returns. I still want to buy into a REIT but I'm going to wait until the time is right.
My equities section is going to be the largest by far, with $75,000 to invest here. I am still selecting all my stocks but will publish my final list in the next post. Due to my fees, the optimum number of slices in this section will be twenty. This means my portfolio will start a few percent down, purely due to the cost of setting it up, which is normal.
The companies I've shortlisted on my watchlist cover all market caps across Taiwan, Japan, Poland, USA, England, Germany, Sweden, Malaysia and Canada, encompassing a great spread of countries and currencies. Sectors span software, real estate, home retail, rubber products and financial services.
So far, I have seventeen businesses on my list. I will be working with twenty equity slices - so twenty different stocks - with an equal investment in each of $4000 (subject to min trading restrictions and exchange rates). This means I will pay around 2.5% in fees all told.
My take on using STRIDE
The STRIDE ratings show me the state of a business at a glance. I also find reading the income statement, balance sheet and cash flow very straightforward compared with other stock selection sites I've looked at.
Remember, I'm very new to this value investing game. These figures might all seem very obvious to experienced investors but this is a language I'm still learning. My knowledge of the inner workings of a business was, until about a year ago, scant. And that's being generous. The way the information is laid out and explained in STRIDE is easy even for a novice like me to understand and that is a huge, time-saving bonus.
The target list is very cool. I also like the screener and watchlists. When I've felt my brow furrowing over something, I've used the questions tab that appears on each page of the platform and received a quick response.
Right. Final decisions will happen tonight and I'm calling my broker in the morning to set up my first trades.
Time to plant my acorns.