Tag Archives: asset-allocation

Stocks and Shares ISAs

There are a lot of very good US-based personal finance blogs around, but sometimes the information given is difficult for a UK reader to understand as the terms used are completely alien to us.

One of the newer additions to my RSS reader is Plonkee Money – a site I found when searching for a US-UK personal finance translator. Plonkee’s UK-US comparison post is now a year old and is still visited regularly when I forget what a term means.

Roth IRA = Stocks and Shares ISA
Roth IRAs and Stocks and Shares ISAs are similar investments but there are significant differences in the rules in each scheme.

Being notoriously difficult to understand, Plonkee is now – in the build up to the new financial year – producing a comprehensive introduction to Stocks and Shares ISAs – a crucial item in your investment armoury. Whether you’re new to ISAs or fancy brushing up on your knowledge for the coming year, this is looking like an important read.

  • part 1: all about you – why you want to invest, and how much money you have to play with
  • part 2: all about risk – successful investing means always being able to sleep at night
  • part 3: all about investments – the types of investments that you can put into ISAs
  • part 4: all about asset allocation – how to decide which mix of investments is right for your ISA
  • part 5: all about funds – narrowing down your choices
  • part 6: all about providers – getting the best deal for the money
  • conclusions – what’s been covered, and what to do next

The ‘Easy’ Way to Intelligent Asset Allocation

NPR‘s All Things Considered recently profiled David Swensen and analysed his investing strategy (Swensen is Yale University’s head investor):

Yale University recently announced a 23 percent return on its investments, swelling its endowment to a whopping $18 billion. The man behind that investment success is David Swensen, one of the most gifted investors in the world. He’s made an average 16 percent annual return over 21 years — better than any portfolio manager at any other university.

Nobody has numbers that good. Not at Harvard, Princeton, Stanford, or any foundation or pension fund; Swensen consistently beats them all. […] Yale pays Swensen $1.3 million a year. That sounds impressive until you realize that, with his track record, if Swensen started his own hedge fund, he could earn $50 million to $100 million a year.

Swensen’s investment formula takes the pain out of asset allocation. All you need to do is adjust the percentages and fund locations depending on your age, your assets, and your risk appetite. Perfect.