Ready-Made Investing: for busy young professionals – taking the worry out of managing your money.

By Walter Coxon

The world of investing can appear frighteningly complex; a fog of jargon, littered with costly traps for the unwary. To the uninitiated it seems you need deep knowledge of the markets, and to dedicate hours each week if you want to do this yourself. Or you need to find a good advisor, which is not easy to do if you don’t have a lot of money to invest.

But it’s not difficult to manage your own money and it needn’t take a vast amount of time. The key is investing in a ‘ready-made’ investment portfolio, where someone else has done the hard work of devising the right blend of investments.

This book is for young professionals with busy lives, who don’t have time to faff with their investments. For people who want to save and invest properly, in a structured and well thought out way.

• Language: English
• Publisher: Troubador Publishing Ltd
• Release date: Jun 10, 2022
• ISBN: 9781803139845

Walter Coxon

Walter Coxon has spent over 20 years working in the Financial Services industry, most of that time within the wealth division of a major banking group. He has held a number of roles, including being on the board of a subsidiary bank and investment firm and COO of an investment firm. He is now an independent advisor and consultant and on the board of a UK private client trustee firm.

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Copyright © 2022 Walter Coxon

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ISBN 978 1803139 845

Cover artwork by Lauren Christian

British Library Cataloguing in Publication Data.

A catalogue record for this book is available from the British Library.

Matador is an imprint of Troubador Publishing Ltd

Disclaimer:

While I have worked in the wealth and investments field for a long time, I am not a qualified financial adviser. Even if I were, I would not be able to advise you without knowing your particular circumstances. The facts in this book are true to the best of my knowledge and belief but there may be mistakes or there may have been changes since publication, so please check the facts for yourself before taking any action. I will not be liable for any loss, of any kind, that you incur as a result of making investment decisions based on the information in this book.

For Kathryn, David & Rachel

Contents

Why I Wrote This Book

Why You Should Read This Book

Introduction

Acknowledgements

About The Author

WHY I WROTE THIS BOOK

My eldest daughter told me one day that her friends were asking her advice on money matters, on the basis they worked out she knew things they didn’t, because they knew she had a dad who knew about these things. So, she said I should write a book for people like her friends, who don’t have ready access to a dad (or mum) who knows these things. A couple of years on, I did that and here it is!

My eldest daughter was born in 1996, which I believe puts her on the borderline of Gen Z and Millennial (her younger sister has been known to declare with disdain – "that’s such a millennial attitude."). I also have a son who is 15 months younger. Both my eldest daughter and my son have recently started into the world of work. I have written this book with their age group in mind; people who are just starting out on their investing journey. They may want to be financially independent at a young age and have the freedom to downshift to a different, less remunerative career. Or, more immediately, it may be simply the need to understand what their employer pension plans do. Or wanting to build up a nest egg to buy a house. And they need to start establishing the right habits so they can reduce the stress that seems to hover around money for so many people.

I am not a qualified financial advisor. But this is my patch. I have worked in and around financial services for 20 years. Most of that time I worked in a wealth management firm that provided fully-advised services and online services for DIY investors. I have been a trustee, I have been a member of an investment committee, I have been on the board of a regulated investment firm, and I have designed wealth management market strategies and implemented new business offerings.

This book is not advice. As you will learn as you read further, proper financial advice needs to be personal and given in the context of a comprehensive understanding of your circumstances. But this is me sharing my knowledge as a ‘local’, showing you around my patch and explaining how I believe you should navigate the world of investments.

Philosophically I think things need to be kept simple. Life is too full and busy for unnecessary complexity. So that thread runs through this book. I am the sort of person who likes to set things on autopilot, who doesn’t like the idea of spending hours each week fiddling with my portfolio. My budget arrangements must be basic; I can’t be bothered with writing every expense on a list or in an app and reconciling it all every month. And I think most people are the same. If it is too complicated or burdensome it won’t happen, or it will happen for a while and then will fall apart. But I am also not one of those people who just pays someone to sort things out for me. I want to be sure I get a good deal, and I am happy to put in a bit of time up front to make sure I set things up the right way.

So that’s why this book is focused on ‘ready-made’ investing. It is for people with busy lives who don’t have time to faff with their investments. But it is also for people who want to be sure they get a good deal and don’t pay any more than they need to, who want to make sure they keep the costs of investing as low as is sensible and have more of their hard-earned cash going into their investments.

WHY YOU SHOULD

READ THIS BOOK

We all know that we need to save and invest so we can put together the deposit on that house, for financial independence or to fund our retirement.

We know that cash is not an investment, interest rates are pitiful, and inflation eats away at your savings, so we have to take on some risk and invest in the stock market, if we want our money to grow for the long term.

And for retirement savings the stakes are higher. Where the previous generation typically had a ‘defined benefit’ or final salary pension where they got paid a guaranteed inflation-linked pension in retirement, most of us now have to save into a ‘defined contribution’ plan, where, if we don’t save enough or we invest it badly, we face penury in our retirement.

The world of investing can appear frighteningly complex; an impenetrable fog of jargon and riddled with costly traps for the unwary.

To the uninitiated there seem to be just two unpalatable choices to success in this world:

1.You need deep knowledge of the markets, and to dedicate hours each week if you want to do this yourself, or

2.You need to find a good and trustworthy advisor, which is not easy to do if you don’t have lot of money.

But it is not true that this is difficult to do yourself, or that doing this yourself takes a vast amount of time. The key is investing in a ‘ready-made’ investment portfolio, where someone else has done the hard work of working out the right blend of investments.

If you had an advisor, chances are this is essentially what they would advise you to do anyway. Surprisingly, most advisor or wealth management firms have a very small number of ‘ready-made’ portfolios (typically around five), ranging from ‘conservative’ to ‘adventurous growth’ and they will identify which one is right for you and invest all your money in that one portfolio and just leave it there.

Of course, you also need to make sure you take advantage of the tax breaks the government gives and make sure your investments are via tax efficient pensions and ISA wrappers.

Also, you need to keep your costs low, saving money on fees so you maximise the return on your hard-earned savings. And by doing this yourself and investing directly in a low-cost ready-made fund, you really save on fees.

Once this is done there is no need for constant tinkering; just keep investing so you put aside enough and stick with the plan through good markets and bad ones. And sticking with the plan is often the hardest part.

There are a lot of books out there on investing, and many of them are very interesting to some of us. But most of them won’t help the non-investment professional to do what they need to do to save and invest to reach their goals.

In this book I will explain this all to you so you will understand what you should do and then I will show you how to do it step by step.

Hopefully you realise there is no magic way to getting rich quickly. But if you follow the guidance in this book you will build up your wealth, slowly. But this isn’t about being wealthy. It is about having a plan, being in control of your money, making sure that your finances don’t cause unnecessary stress and make you unhappy and making sure you can fund your plan, whether that’s a deposit on that house, for financial independence or to fund your retirement.

Finally, you will notice this book is short. That’s because (a) it is really not that complicated and (b) I want to be sure you will read it all the way to the end!

INTRODUCTION

So why should you save and invest? For many it is to put together the deposit on that house, for others it’s to have some capital to start a business, or for financial independence or to fund retirement.

For retirement savings the stakes are high. The ‘full’ state pension is only £185.15¹ a week and if you don’t save or you invest badly, you face penury in retirement.

What would a financial advisor recommend you do, if you had one (or could afford one)? Yes, they would tell you to invest, put aside money for the future. But how would they advise you to go about investing?

Encouragingly they will all pretty much tell you about the same things:

1.You are going to need to take on some risk (i.e., the chance you will lose some of your money) – there is no reward without risk and that means some stock market shares or funds of shares in your portfolio (and cash is not an investment).

2.Diversify your investments (i.e., don’t put all your eggs in one basket) by investing in a ‘multi-asset’ portfolio.

3.Take advantage of the tax breaks and incentives and put your investments in an ISA and/or a pension.

4.Invest enough; and

5.Stick with it (through the market ups and downs).

Actually, persuading you to ‘stick with it’ is something that the better advisors will focus on. Once you have set up the plan and understand what you are doing you may feel you don’t need an advisor. However, many of us struggle with ‘composure’ – the ability to stick with the plan, even when the markets are going down.

Carl Richards, creator of the Sketch Guy, a New York Times column in which he explains financial concepts in just a few strokes of a marker pen, has this cautionary illustration on the cover of his book, The Behavior Gap.

Figure 1: Fear and Greed

I often think that the most important role an advisor plays is to make sure you stick with the plan and talk you out of selling down when the markets are a bit choppy. It is a bit like having a personal trainer; yes, they show you how to exercise properly, but for most of us the real value is in the structure and discipline; they keep you at it and work you a bit harder than you would on your own. Like with exercise, often the right thing to do is the most uncomfortable, and we need help to push through.

The thing that will most surprise