‘Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.’
So far, our focus has been on top-down asset allocation. It is probably the most important investment decision you will make, determining the preponderance of your portfolio’s return and risk. However, choosing bottom-up investments makes a big difference.
After setting your asset allocation, the next step is selecting investments under each asset class. Choices are sometimes bewildering. For example, you decide to allocate 20% of your portfolio to UK equities. You can choose individual UK stocks, a passive index tracker or an ETF, an active fund or blend a number of the above. ...