First portfolio

Hello Scott, hello Dave, how are you mate, yeah I'm good thank you mate, I'm good, how are you? Yeah good thank you, a little bit tired than normal, we normally record this a bit earlier but, yeah another day another podcast, another day another podcast, but yeah I'm excited for this one, I think it sounds like there's something that, there's some information that people will be able to really take away. Yeah I've tried to keep this one as practical as possible, it's actually a question that was sent in from one of our listeners, so hopefully whoever you are, you're going to find this one useful and hopefully more people will also enjoy it, so yeah. Yeah and on that note, look it's not that many of you, yet, but I've been pleasantly surprised by the amount of listeners we've got so far and the support people are showing. Yeah, yeah, 100%, I just want to say thank you to everyone so far for listening. All three of you, you've been great, no honestly, and mum, yeah, hi mum, it's been good, we've got a few questions now from people and we will try and address some of them, line some of them up, there's one about warm-ups and cool-downs which I'll try and address in another podcast if there's anything I want to quickly answer those questions, and there was one from Heaney1UK who said, why would we take financial advice from a man who describes a river as three foot tall, so that's also another question. I still stand by that. Cool, but yeah, should we get into it? Yeah, so I'll kick off with kind of health-related, not fact this week, just a little recommendation actually, and it came from me listening to another podcast, the author of this book that I'm going to recommend has been on quite a number of podcasts and I've heard him a few times and enjoyed the things he's said, and I went and actually then read the book this time, so the book is called The Expectation Effect. Oh, I haven't heard that, no. So it's called The Expectation Effect, it's by a guy called David Robson. Again, I haven't heard it. This is interesting because I'm usually quite good with my books. Yeah, and it actually addresses a lot of the topics that we will go into and have gone into and some of the research that we've talked about, so I don't think he actually talked about the study, but remember a few weeks ago we talked about the placebo pill and paying more for it, so the book's kind of based off a load of really good scientific studies that go into mechanisms like that, so essentially placebo, a lot of data and research and it's just really some of the studies are just mind-blowing to me. So there's the placebo thing and things like people saying that placebos will cause pain relief and things like that, sham surgeries, so when somebody goes in and pretends that they've done an operation, they don't get through ethics committees very frequently, but like two groups of people, one group have the surgery, the other group have a fake surgery, and they do better than people who, both groups do better than people who just do rehab alone. So they'll still end up with stitches for example? Exactly, yeah, so they open the skin up, so they believe that they've had the operation and there will be a little bit of pain associated with that, but then they recover the same as the group that actually have the surgery and things like that, and better than people who don't have the surgery, and then he talks about the nocebo effect, so that's the opposite basically of a placebo, so placebo often being a positive effect from something because you believe that it's going to work, the nocebo being you think something might be negative and therefore it becomes negative. Okay. So he wrote the book because he's quite often suffered with his mental health, started taking antidepressant medication and one of the potential side effects was headaches, and he started getting headaches, and that's actually what I think sparked his interest in this whole field and topic, so yeah nocebo is that kind of mechanism, placebo being the other thing, so yeah it's all just about the mind and these crazy studies of how powerful beliefs can be, the expectation of certain things, there's this one study, I'm not going to talk about all of it, I'm going to let you just go away and read it, but a quick summary of the most crazy one to me was that some men that emigrated to Laos in Southeast Asia, sorry maybe I might have already misquoted it, moved from Laos, had a greater rate of nocturnal death, so more people died at night because they believed that there was this spirit that could come and kill them in the night and there was this huge increase in death and they actually attributed it to the expectation that they believed that people were going to get killed in the night, they died of cardiovascular events mainly because they were probably becoming insomniacs and not sleeping, becoming very stressed and then getting, and those things obviously relate to negative cardiac events happening, so people actually dying because they believed they were going to die. That would be very scary wouldn't it? I might have explained that one badly, again I'll just let you crack on. And what's the book called again? It is called The Expectation Effect by David Robson, I have no association with him other than he has a cracking first name. Okay so the topic this week from you. So this week we are going to talk about how to build your first portfolio. So what you're trying to say is we need to talk about portfolio building first time? That'll do. Thank you. Scott I'm really looking forward to this one, I'll tell you why. Go on. I think it's something that I know previously I wanted to know more about so I can imagine there are a lot of people who will get some really useful information, it won't just be little facts, it'll be something that people can hopefully, if you're any good, take away with them and use. I hope it's going to be as practical as it can be, less theory this time and more what real people can use. So yeah, I'm looking forward to it. We've had a few people reaching out and saying I'm interested in how do I build my portfolio, these are actual real questions, not even made up questions. Yeah from real people. This is a listener's real question which is very exciting, it's the first one that we're actually going to do and it's about how you can build your first portfolio. But before we do get to that, because I kind of think that building your first portfolio is just like it's going right into the deep end and it tends to be the thing that people just automatically jump to but it's not necessarily the right place to go straight away. So there are levels to these things and we're going to start at level one. Okay, it's a good place to start. It's always a good place to start, level one and we're going to go all the way through the levels. Tell me about level one of portfolio building. So level one, this is kind of like your Nando's lemon and herb in terms of spice level. So what you'd always order. This is my main order at Nando's and the key theme is going to depend on three main variables which is going to be time, interest and knowledge. So remember these three variables in your head about how you're going to choose which level is correct for you. When you say interest, you're not talking about interest as per your last podcast. No, that's a good point there. It's interest as in just generally how interested you are. Yeah, exactly. So lemon and herb, here we go, level one is managed portfolios. Okay, so this is literally when somebody else manages your portfolio for you and this will be good for someone who has a lack of time, low interest, you don't really care, low knowledge and it's basically hiring someone else to do this for you. It's a tough idea. Yeah, it is ideal for that kind of person who just doesn't really care but they know that they want to invest and the way you can get access to this is through a wealth manager. So this is essentially my bread and butter really. What wealth manager will do, they'll take care of all of your investments and depending on what kind of level of service you need and want, they'll also look at more your holistic whole kind of financial life if you will. So they might look at your estate planning depending on where you are in your life, so whether or not you need to do some inheritance planning, that kind of thing but for me and you Dave, that's not kind of, so we need to really talk about and I don't think our listeners will care right now about that but maybe in 50 years when we're still doing the podcast, we can start talking about that kind of thing. But there are two main types I'd say of wealth managers that I kind of put them into two groups. You've got your traditional wealth manager who will provide quite a high touch service. They will be lots of face-to-face interaction. You'll get kind of an ongoing relationship manager with them. They do tend to charge more than what the second option is which is a digital wealth manager which I'll go into in a second. The fees usually around sort of half a percent to two percent for a wealth manager who will kind of take care of your financial life but they do tend to have minimum amounts so it's kind of a rich person's game. Have you got a rough indication of where we're talking? Yeah so depending on where you go, you're looking at a minimum investment of like between some say about 300 grand, some say 100 grand and then you've got the top level somewhere like Coots who would say a minimum investment of like a million. Okay. Yeah so it's big numbers. So not many of our listeners. I mean we don't know. We don't know who's listening. Okay and I get it. So you don't have to do a lot with it yourself. No. So you're handing the keys to someone else. Hand the keys over. However, you've got to be a rich person to go with them. Okay. Second option though is a digital wealth manager and these have kind of come to light in the last say 10 years really like most of tech but they are way more cost effective and they're more for the everyday person really. So you're looking at your fees will be between sort of 0.45% to about 0.65%. The minimum amounts are even I think when I was looking there's some like 500 pounds to get started. Some are about 5 grand but it's a lot more accessible for the everyday person to get. A very similar service but you completely lose the complexity of a traditional wealth manager with the service they can provide. So for non-complex situations like to be honest the majority of people so I'd say it's like 80-90% of the population probably won't have these really complex financial plans that they'll need and especially at a younger age. So taking me and you Dave, if we have low interest, low time and low knowledge we probably would go towards the digital wealth manager route. And the two that I'd probably recommend that I've signed up for and had a look at and kind of use their apps are Money Farm and they're like I think they're based they're like a European based company but like come over. They've got a cool app and UI and all this kind of stuff and then the OG is Nutmeg and Nutmeg was recently bought by JP Morgan but they're still kind of for the everyday person and they do very similar stuff to be honest with you. You invest in it, you'll get you'll be put into a certain risk portfolio so as you as you sign up you'll go through this risk questionnaire to kind of determine where your risk tolerance is on the scale and then different goals that you might have and then you'll basically get allocated this kind of model portfolio based on these questions. And then the app does the rest for you? Then the app will do everything for you so all you have to do is either add money if you want to, if you just want to withdraw some you can do it that's kind of it really. Do you get to have any input on potentially the type of companies that are invested in or the types? No so this will be completely discretionary to the company and that's what we'd call a model portfolio so you are you're kind of risk rated and you'll be just slammed into whichever one they say. You might get an option to say invest in more of an ESG focused one rather than like a traditional one but like all that's going to do is screen out some of the kind of bad companies in quotation marks. So you don't get a lot of say in it, you don't have a lot of control but you know for that type of person that meets those three variables that's the perfect thing, you don't want any control do you? So that's Lemon & Herb. So you've locked up to Nando's and you can go one of two ways, if you're already pretty rich you can go and get the first class service, you can get the waiter to pull the chair out and go and do the free roof for you or the other option you sit down and AI does all the rest for you but you don't get the little personal touches of somebody filling up your drink but probably more realistic for most people listening to this podcast. Yeah exactly, exactly. Cool so Lemon & Herb, are there any sides on that? No, no it's just, you've got me there. Okay, take some time. Yeah I'll think about that as we go along. Yeah have a read. Yeah no, it'll be there. Okay so what's level two? Okay so level two, you're medium spice, this would be you right Dave? Yeah a bit of medium, yeah sometimes, sometimes you know if I'm trying to impress people. I regret it in reality. Too rich for my brain. But yeah I'd say I'm a medium man. Fair, so extra medium sometimes. So level two is target date funds. Okay so this is for people who still have lack of time, have low interest in investing, low knowledge as well and what they actually are and it kind of says what it is on the tin kind of thing. So the target date funds will automatically reduce your risk as you get towards the end date of the fund. So the fund will have a specific date on it. Okay so say you being 28 and you want to retire in 20 years time. Yeah casual, retire before I'm 50 absolutely. Goals right? Not as a physio mate, that's not happening. I'll be going until I'm 104 if I live to 104. Okay so but keep the maths easy. So in 2043 okay you could buy a fund with that specific date on and as you get towards that date the risk level of that fund will be slowly inching its way down and your safer assets will be going up. So what that means is if you split it between say equities being your risky stuff and bonds being your safe stuff as you get towards your target date, your end date, your equity portion say it starts at 80% that will be slowly going down maybe it goes to 70 and then the bonds start at 20 that goes up to 30 and you can kind of see the dials slowly move so you don't actually have to do anything. It does it all for you all automatically. The main kind of pro of doing that is that it's kind of like your set and forget investment so you invest in it and then you can keep adding to it as you go along but you haven't got to do anything to do it. It's literally similar to like a managed fund but it's a lot cheaper so you don't actually have to pay a company to do it. You have to pay a company but you don't have to pay like a specific manager to do it. It's kind of all done automatically so your annual fee on average is like around 0.25% so it's almost half of what the digital wealth manager would be but it's still on the slightly expensive side compared to if you're going to do it completely on your own so looking at like an index fund or something like that. So what makes this more medium? Why is this harder to do? So it's harder because you don't have anyone holding your hand essentially so you've still got to do this yourself and you'll do it through a broker so you've got to go and buy the fund and there's no risk questionnaire so you haven't got someone kind of putting you into this investment. So where a wealth manager is very much hand-holding this is you're getting someone to create and build the portfolio for you but you've got to make those decisions on yourself which one you're going to go into so you're kind of it's slightly above that level one. It's all passive as well which means that you're going to be investing in an index fund which is a low-cost fund and you'll basically be tracking the market. So let me explain so if for example this fund was built of equities and bonds your equity might be made up of an index which could be the MSCI world which essentially is an amalgamation of all the world's countries and it kind of proportions it out for you and then the bonds would be like the Barclays global lag which is just like another bond index of loads of global bonds that you can buy and what it basically means is that you're not going to get out performance above the market because you're only ever going to get the market rate of what's going. So it's passive is basically what that means so that's level two that's your medium. And is there a you know you use 20 years as the example could you set that at any number of years? Yeah so there's loads of choice for any kind of age so you know we could be speaking and we could both be 50 right now and we're looking at... I'll have retired obviously. You'll have retired I'm still going but still going on this podcast. But yeah you could buy one that you want to retire you could say you want to retire in at 70 for example or you could do it for a lot longer you could buy a 40 year one and it is... Back yourself. It's yeah exactly it's traditionally is a retirement product project it's a retirement project? No what? Product. It's a retirement product and it's very similar to what your pension will be invested in so if you've got like a workplace pension or a pension provider it'll be a very similar product but this one you can just put in in your you can put your kind of your taxable money into it. Got you okay okay so let's keep with our source levels and stepping up that little bit of a gear things are beginning to get a little bit spicy now. I'm starting to get excited Scott. This is when the mayo starts coming out because my tongue's my tongue's on fire. You feel there the glass of milk a lot of mayo. Tears coming down my face yeah yeah okay I'm ready I'm ready for it. So we're into level three now this is this is the hot hot level and this is DIY passive okay so it's do it yourself but we're sticking with passive investments so we're not going we're not going the whole hog right now okay and this is good for someone who has still a lack of time but now you've got a bit of interest so I'd say medium interest and a bit of knowledge as well so you want to you want to do your research on this you don't want to just go in blindly but as I say it's still going to be passive and again to do this you can invest via a broker and that can be someone like you just google brokers UK and you'll see like Hargreaves Lansdowne or AJ Bell one of the one of the main kind of brokers on the internet and it's basically a cheap way for you to invest in the market and get a broad exposure to to the investment market so what you can do and you can almost create your own target date fund in a sense but the key difference is will be that you'll have to do the rebalancing so your risk isn't going to slowly go down over time okay but the benefits of this is that it's a slightly cheaper way of doing it so on average you're looking at paying between 0.1 to 0.2 percent so you're saving a little bit on cost on on the annual charge there and again the way you want to do it is kind of split out into what your risk is going to be and what your safe assets are going to be so as I mentioned you could put say based on your age Dave you could go say 80 into your risky bucket and that would be invested in something like the MSCI all countries world so that's literally like investing into all of the countries it's again an amalgamation of all the companies and they're spread out into different regions and sectors all done for you you don't have to worry about that stuff and it's very cheap and then as I mentioned before the Bloomberg or the Barclays global ag which is an amalgamation of bonds which again is done by country as well so you don't have to worry about that stuff it's a cheap way of getting exposed to the market as I said however you're gonna have to manage your risk on this one because over time your risky bucket so your equities are going to grow and your safe bucket so your bonds they're going to get smaller just by the nature of the portfolio so you do have to manage and monitor the portfolio and manage that risk because if you want to say in two years time you're thinking okay I'm a bit older now I feel less risky I feel like I've got a lower risk tolerance you're going to actually want to start trimming that and then putting some into the safe bucket so there is a bit of hands-on kind of approach to this one but as I say it's still passive so you're not going to outperform the market but you're also not going to underperform so much unless you do some weird stuff so it's kind of like a your it's what you'd call your tracking error to your benchmark it's going to be quite minimal and that's kind of what you want okay and we'll go into that in a little bit more in the next one but it wouldn't be something to go in blindly on no you want to have a bit of you want to have a bit of knowledge about how to do it what you're going to invest in because a lot of people say to me oh yeah just go into the S&P 500 okay which historically has done really well like you're earning on average say nine ten percent a year on it but when you actually break down what you're invested in you're invested in the top 500 companies in a specific country and then when you look deeper into that that index is usually driven by like the top 20 percent of these kind of those companies so it's heavily tech it's heavily all those big names that you might know like amazon google all that and i'm ignoring that and and so your diversification from that point of view is actually a lot lower than you might think so you know you want to do a bit of research about what you're investing in where your how how your money spread spread into different geographic regions and different sectors as well so yeah there's a little bit of research that goes into it okay that makes complete sense scott um so we've gone through three levels now yeah we're getting the big boy stuff i'm not sure i'm ready for level four this is i think i need a break yeah no go on tell me a little bit about about level four so extra up we're going there all right so this is diy active and this is the thing that i kind of started with this is what people tend to go straight in with um but it's it's the top level okay so it's not necessarily where people should start and it's great people who have lots of time who have a high interest in it as well you've got you've got to be reading them the news kind of keeping up with markets keeping up with what's going on the world and also a decent amount of knowledge as well you can't just go kind of blindly into building a portfolio because there are lots of kind of there's lots of theory behind it and there's lots of stuff that goes goes with it so yeah my advice is if you if you meet all those three then yeah crack on um and so what kind of things if i were to be interested yeah um what kind of knowledge would i have to be ascertaining would i have to be reading what you know what stuff am i looking out for so i i would say that i mean the easiest thing to start with is just reading news or watching some like bloomberg or something like that just to get an idea of like what's going on in the world tiktok video potentially potentially if you can find if you can find someone who's decent um but yeah start with just general financial news then i would say buy a couple of decent books and like some of the some some can be dry but they are good like there's one there's a couple that i recommend so i'd say mastering market cycles is one by howard marx um he's he's kind of like a a real legendary investor and that's all about market cycles because it's very very important dare i ask what he doesn't remember he's a chef he cooks the chicken um and then there's um value investing by ben graham like again he's like one of the og for for basically understanding how to pick a stock it's very it's quite a heavy book um but it's quite a good one um okay yeah there's there's lots you can just kind of find that would be a good starting point just to get an idea and then try any i mean investopedia is a really good place as well um just to give you kind of like definitions unless it's like a free online that's it's a bit like wikipedia but it's for finance you know what we're finding something out here yeah there's a physiopedia i was there which is probably a tedia for everything there's like a little physiopedia free access yeah yeah generally can be right yeah you know if you if you're you know we've gone off track here but it's still relevant to our podcast you know if you're generally you've maybe got a diagnosis from somebody and you're you want to know a little bit more about it it's it's it's one of the better places to use it references research papers and it it's it's written by people with knowledge rather than just kind of randomers on the internet okay yeah not our pds we've got the pds um and then just a bit of like there's portfolio construction theory which is a kind of a a key topic i guess that you you would learn about if you got into the industry um that's why you learn the kind of efficient market hypothesis and all this kind of stuff but if you're interested i'll let you go and do that i'm not going to speak about it now um so yeah it's building your own portfolio obviously gives you loads of flexibility in terms of how you want to build it what you want to go into it and it also gives you the opportunity to earn higher returns than the market so there is a bit of active management going on in here and it is also again similar to if you'd have paid a wealth manager to do that they have portfolio managers who would be trying to beat the market as well so it's an active passive kind of mix to build this portfolio um so the pros of doing this is as i say you can exclude certain investments such as like you know if you're really against the porn industry you can't you just get rid of any companies that are in that or could could be anything and they've smiled at me now just the way your eyes looked up and said porn industry i know you'd keep it in we don't have to go there and it's a cheaper alternative to using a wealth manager because you're doing it yourself obviously um but the data does show so this is kind of a caveat to it the data does show that the average diy investor underperforms the market wow okay okay by a fair chunk i think it's like five percent annualized so that's to be that's something to be aware of but i think that's a product of the fact that people just jump into level overconfident yeah overconfident and they don't necessarily reflect on what stage they're at so obviously it's an average we love averages so some are going to be outperforming some are going to be underperform some be in the middle um but yeah that's a six foot man in a three foot we're not going into that again um so that's that's your pros and cons of it if i was going to give some advice on how to start and how to start thinking about building one this is where i'd start so step one is determine your risk level very similar to what the wealth manager would do take a risk questionnaire you can find one online just google it and it'll give you an idea of what level you're going to be in um and it it's i can't actually remember but i think it's like level one to seven a lot of it's got weird more levels yeah yeah i know um but yeah once you understood what your risk tolerance is that will really help you then start thinking about how you're going to put together your portfolio number two so step two is going to be choosing your benchmark and this is really important because if you don't have a benchmark set in place before you start you're not going to know how well you've done okay so when you say a benchmark can you kind of clarify what you mean by that yeah so choosing a benchmark and it will be very similar to the previous index funds that i mentioned so you want to choose something that's that's going to represent a market that you're trying to beat essentially or compare yourself against because if you don't have anything to compare yourself against as i say you you're not going to know if you've done better or worse i.e the market might have been up by or you might have been up by 20 percent and you're like yeah smashed it but if the market's up by 40 you've actually lost out on 20 percent there so it's really important to know where you're where you where you are essentially that that makes absolute sense to me i think that's a super obvious point but i think you could get very carried away you know let's say you've just started investing and you you've read a few things and you invest some money i can i can literally picture someone doing it and you've invested some money and you go wow i must be a real genius or here and things just because the overall markets have jumped up quite a lot and you go happy days i'm up 20 but actually the mark the benchmark's gone up 25 so you're actually underperforming yeah and that was such a a kind of a trend in covid times when basically the market was just going up and no one could basically lose money yeah and everyone thought i'll be honest i did it like as in i started investing a little bit around that time and i looked at how well everything started to go i was literally i started to do like pre-calculations in my head like if i carry on investing like this i'm gonna be a millionaire by the time i'm 35 yeah so wow okay and actually that's relatively similar in my profession um that we have to know as i have to know as a physio for for general injuries what is the average time that somebody's going to heal in you know is somebody healing quicker or slower than than the average um you know they might go i'm making really slow progress because i've seen that injury multiple times i know what the research says sometimes i've got to reassure someone this is this is normal this is the benchmark this is what normally happens um and we can always you know when when do we worry about someone where we go as a law of averages things are now not going as i'd expect them to and you're well below the average curve for this condition so yeah benchmarking yeah no very important and sometimes overlooked um but once you've chosen your benchmark and just yeah just i guess some advice would be choose a benchmark that is appropriate for what you're trying to do so if you're trying to build a global portfolio choose a benchmark that is a global index essentially so like a msci world or all countries world if you're just focusing on a u.s centric portfolio for example maybe an s&p 500 benchmark is more appropriate so it's what's appropriate for what you're trying to trying to achieve there but once you have chosen it step three will be building your long-term asset allocation so i like to think about this as you're now putting the kind of the foundations in the the big sturdy blocks or bricks that are going to hold up the house so it's nothing too fancy it's going to be your low cost again passive index trackers and what you're going to do you're going to what i would do would be trying to almost replicate what your benchmark is to start off with so you'd have a look at msci world for example and say it's 60 percent of the u.s you would allocate 60 into the s&p 500 as a u.s proxy then if it's five percent in the uk i'd go five percent the footsie and you'd kind of work your way down and almost build the benchmark yourself using these blocks and try and make it as low cost as possible because cost is a big factor but once you're once you're happy with this kind of once you feel as though you've got a sturdy portfolio and you kind of go through this all the way all the way up and not just an equity so then you'll build some diversification in there into different asset classes so you might look at some as i say fixed income stuff so into bonds you've got some corporate bonds and then also some alternative investments so you might be looking at some commodities like gold or some you can buy like a hedge fund or a fund of funds as well as funds of funds as well as property and infrastructure and all of this stuff you can it might sound a lot but again go on to the broker you can start typing this these names in and you can find a property fund you can find all this kind of stuff but word of warning like not all funds are made the same so you do want to do your research into what funds you do build your portfolio with once you've got that in place and you've got a decent amount of diversification within there and you're happy with the risk risk level that you've chosen and it's kind of similar to where your benchmark is this is when we move into step four and this is when it gets a little bit spicy so step four is choosing your tactical asset allocation and tactical asset allocation is your short-term bets so this is where you're going to really start making small small bets where you're deviating away from the benchmark so for example you might say that you think the US is going to do really well this year for whatever reason you might have read something you've seen some macros and you're like oh yeah that's good like backgrounds looking good and as a result you're now going to say I'm going to allocate the benchmark is 60% I'm going to allocate an extra 5% of my my risk budget here into the US so I'm putting 5% extra but then I'm going to have to take it from somewhere else because you don't want to increase your whole risk here so you kind of have to do almost what you'd call a relative value trade so you would put 5% in US because you think it's doing well but you might say our emerging markets look rubbish because of you know some FX stuff going on it could be any reason and you're going to decrease your allocation to emerging markets so you're taking benchmark bets here and with the goal is that what your theory actually comes out to is correct and US does do better than expected and you outperform what your benchmark is so you make that extra little bit of on top of what you're yeah what you can get you're not throwing I like the term bets that kind of I can visualize that quite well so you're you're maybe putting a little bit extra of your portfolio as a whole on something maybe from a hunch or something you've read but you're not throwing everything on red you're not you're not just going yes or down on that exactly so you still want to you want to still manage your risk with this and to do that yeah it's about being mindful of where your deviations are and also knowing that if they're not playing out kind of almost put a time limit on them as well so these are more short-term bets if you like and when I say short-term we're talking like maybe six months to a year okay it's not I'm not talking day trading or anything like that that's completely different but it's yeah it's it's looking at different fundamentals in the market so and it could also be it's not just looking at increasing say a certain region so you could dive even deeper in there and say oh the US looks good but specifically healthcare in the US looks really good so you might try and find maybe a couple of direct stocks in the healthcare industry that you really like and you could increase your allocation to those and there's I mean there's loads of ways of doing and you could start adding some active funds in here so that's when you pay a fund manager a fee so it's not passive anymore so the fund manager's already built a portfolio for you and you can get that into your portfolio and that tends to be like again loads of choices so it could be a global fund manager it could be a specific sector where they're focusing just on using healthcare as an example or even specifically in UK so you could buy like a UK smaller companies fund where you've got a professional who are picking these companies for you and then that can just go into your portfolio but yeah it's being aware where your bets are I think is the key thing there okay and then to finally just to finish off step five is monitoring and rebalancing and this is really important because if you just leave your portfolio as it as it is a portfolio is very it's a very dynamic thing it's changing every single day as soon as the market's open you need to be on top of where your desired asset allocation is and where you currently are and if you're breaching certain constraints i.e. you've gone over say your your equity budget was 60% overall and now you're at 62% you're now taking more risk than you actually intended to so you need to work out that I'm going to trim some from that and you need to find out where are you going to trim it from so where is that our performance come from and then redistribute it into somewhere else in the portfolio that's actually underperformed so it's really important from this risk management point of view and then obviously through time you know your risk tolerance might change so how how often would I be sorry to butt in there but how often would I be checking it obviously you don't want to be too reactive with with this stuff either but like yeah how frequently do I need to be keeping an eye and when might I make changes good question actually because it's finding a balance because every time you trade there's a cost involved and for the majority of people the cost depending on what you've bought the cost can actually be fairly fairly large so what I say large large relative to your portfolio size so if you're buying a listed ETF for example on average you're paying like £10 per trade so you do need to be a bit mindful of the size of the trades you make and how often you do it and that's kind of it to be honest with you without without going too deep I think we've covered all the Nando sources yeah I hope it's been useful no absolutely I think as we we say to each other after recording this or it's hard when you're when you're a professional to keep things brief sometimes to keep things brief sometimes because you feel like oh you're doing it a disservice in a way but it definitely is an initial starting point for most people I've learned a lot through that I think my key takeaways are before starting a portfolio obviously not jumping the Nando source idea I really like actually at that think of okay I get what the different levels are and I get the lower you know the less spicy it is the more money I might have to pay for someone to take the ease out of it and those three terms and let me try and remember them so interest time and knowledge I would want to evaluate okay where do I sit and I think each you know each of the listeners can be self-reflective and go how much of each of those commodities do I have and then set the level and then on each level mate I know that there will be a lot more depth to each of them but you know for me with somebody with really super limited knowledge around all this stuff I think it's good to be to be aware of the different options you have yeah and I think that's if you're going to take away anything from this it's about self-reflection I think that's going to be the the key thing of today yeah is is just stop work out where you are and then just go into it and you could do your own and I really like that um that's that that most people that that go in you know super cocky about it and think that they can beat the market in the long run underperform it that's yeah it's the truth that's quite interesting and it just makes you stop and think you know do I have it's the same same in my world you know do I have the knowledge around injury and rehab to risk doing this myself I might be able to rehab this injury myself am I going to waste a shed load of time and money in the long run doing it or just pay someone just pay someone just pay someone get an answer quickly yeah um and get it sorted quicker you might go it's a bit it's a bit of money but yeah interesting no thank you I think it's honestly you know I've let you kind of talk but actually super interesting so thank you Scott thank you Dave do you want to sign us out yes so obviously everything today was my own opinion and if you do want some more advice on this topic I'd always say seek professional help