When it comes to running my portfolio, I spend a fair amount of time thinking ahead. I like to plan what new money I’m likely to add over the next year, whether to shift my position sizes a bit, and sell a holding or two to use up my annual CGT allowance.
I’ve been doing a bit of a clearout recently and I came across a mass of old investment statements that I thought had long since departed this world. For a little while, I was tempted.
Investing can be simple but it’s rarely easy. Our monkey brains are constantly playing tricks on us and taking mental shortcuts that can undermine even the best investing decisions.
I don’t consider myself to be an active trader. In a normal year, I’ll reinvest some dividends every few months and add some fresh money to my ISA in April or May. That’s usually it.
If I am feeling particularly energetic, I might sell a holding that doesn’t seem to cut the mustard anymore and reinvest the money elsewhere. Then I might need to lie down for a few years to recover!
Picking good investments is important but perhaps represents just 20% of the puzzle. Learning how to hold onto the darn things, regardless of what the market throws at you, is arguably the other 80%.
There’s nothing like a complete and utter political shambles (I’m guessing you know the one I mean) to remind us why we need to be globally diversified when it comes to investing. It’s prompted me to dig into my portfolio a little, to see how diversified I truly am.
We’re currently in ‘correction’ territory with the UK market down 10% from its most recent peak in May 2018. Stock market falls like this can hit investment trusts harder than most, as a lot of funds have some level of gearing and discounts to asset values tend to widen.
Measuring the performance of your portfolio can be a little tricky in practice. Having experimented with a few methods, I’ve now settled on a mixture of Google Sheets to provide an up-to-date valuation and a simple unitisation calculation to measure my portfolio performance.
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