Even when I was active in young equity savers, it was mostly talked about shares and not so much about funds because it was not as “exciting”.
Often, those who are interested in stock exchange and investment are also very interested in talking about different companies and what their future looks like. I myself never really fit into those discussions and didn’t particularly like it either. Reading quarterly reports and analyzing companies to find “right” has not appealed to me. But for over 15 years now I have really only bought and traded in shares (except for a global fund that we added to the money machine about 2 years ago to get some global exposure).
As soon as it was about funds
I said a little casually that it is not something to have, it is better to buy shares so you avoid the fees.
Since I really had no interest in analyzing companies and “shopping around” among different stocks, in our money machine we have been very inactive after we have carefully selected the holdings we have today. We did the job once to find companies that we believed in and then we put together a money machine of what we have held for many years now. We have made some small changes among the holdings, but there have been some minor changes over a period of time over several years.
At the same time, for about two years now, I have read both books and scientific articles on this with active / passive management and realized that science says that the best thing for small savers is to own funds with passive management. Over long periods of time this is the best thing. If you want more background, I recommend the post I wrote last year about it. Therefore, it is now time for us to take the step from equities to funds for us.
I should honestly say that it all feels scary. It has taken time to gather courage and finally get hold of this. It was at my and Mrs. Oberoende’s latest kick-off in August that we agreed that we should now do something about our money machine.
We have been fortunate that our money machine has outperformed the index over the past 5 years, but it is probably just luck. It is too short a period to say that we have actually selected stocks that outperform the index. To top it all, the last 5 years have been a stock market that has gone up, who knows how the portfolio has behaved in decline ?!
To make the transition from equities to funds less painful, we have made a bit of a compromise, to begin with anyway. Our stock portfolio, which today consists of 85% Swedish shares and 15% global fund, will in future look as follows:
We thus retain some of the shares so far in order to make the transition a little smoother and to let our decision sink further before we next sell all the shares and replenish the funds. The idea is that we keep all the shares we have in the portfolio and sell an equal percentage of all the holdings. In this way, we still have a share portfolio that is distributed just as it is today, only that the value is smaller.
The idea of the composition is that we get some of each
By purchasing a global fund, we gain exposure worldwide with the emphasis on the United States. We live in Sweden and like Swedish companies, so we have a relatively large share of Swedish funds. The Swedish stock exchange has historically been one of the stock exchanges that performed best by the world’s stock exchanges. On that we have some emerging markets to take part of that bit as well.
It has been a process to arrive at this decision and as mentioned, we do not go all the way at once by retaining some shares. What has made the beaker run out is that I read more and more that passive index funds are the right way to go for most small-scale savers who are long-term and want to be inactive. I myself want to be able to disconnect myself more and more from our investments in order to partly use the time for something else and partly not to have to worry about us going worse than the index or having to do something with the portfolio.