Bitesize: Are You Investing in Too Many Things?

Alec: [00:00:07] Welcome to Bitesize on Get Started iInvesting. In this series, we feature some of our favourite lessons, quotes and moments from the podcast. If you'd like to listen to the full episode, we've included the link in the show notes. 

Bryce: [00:00:23] I think that's an important one. And a lot of people do ask. It's like how if I have ten or $20,000, what is the split that I should be giving to some of those? Is it 20 different ETFs? Is it 50% in one, 50% in another? I know you can't probably answer that because it's sort of a personal thing, but how would you think about that?

Charlie: [00:00:42] Yes. So I say if you've got a small amount and I guess when I think about small amount, it's, you know, that kind of less than a hundred or less than $50,000 to invest, you really don't want more than two or three lines of investments, to be honest, because you end up cutting up the pie too thin. You end up having immaterial exposures that, you know, even if that immaterial exposure does 100%, it actually doesn't change your life. So if you've got 50 grand and you've got 20 lines of investments, you know, simple math tells you you've got about two and a half grand or two grand or whatever in every investment, even if that thing shoots the lights out to turn into four, it actually hasn't changed your life. You want a greater exposure or more material exposure to normal, good quality lines of investments and allow efficient market theory to do its job over it, over the medium to long term. 

Alec: [00:01:32] I can see Bryce tapping away on his computer. I think you might be selling a few lines of investments right now.

Charlie: [00:01:41] That just means that that just means that apart from some core material stuff you've got, fundamentally you're punting like, you know, and yes, you'll have an investment thesis and yes, you'll have a view on the particular individual stock and you're you're actually doing that more out of interest than out of actual investing. You're doing that? Yes. More out of, you know, wanting to see whether or not, you know, it does Well, as opposed to the actual investment thesis, which is all about, especially if you've got 50 or 70 grand, is really just about a savings plan. 

Bryce: [00:02:10] Yeah, I love that. That's awesome. Such a question we answered on our get started in or tried to answer and I got started investing show last week was our savings accounts back. 

Charlie: [00:02:22] Yeah yeah. Look at my view on cash and it's probably not everyone's view on cash is cash is just something that's waiting that's waiting there to be spent. You know, and cash is really just waiting to be invested into something more interesting or for you to go buy a race car or something with it. 

Bryce: [00:02:38] Charlie loves race cars. 

Charlie: [00:02:40] Yeah. Look, I think fair returns certainly feel a little more compelling now where you know, your high interest bank accounts generating three and a half or four or whatever it is and it's rewarding you for sticking money in there. The 4% kind of feels okay, you know, and I think there's kind of some economic debate or, you know, someone smarter than me is going to say, yeah, but the real returns are actually negative because of inflation. So yeah, that's kind of, you know, it's kind of right, but it's kind of for short term, it's kind of rubbish, rubbish, rubbish, because the cost of bread milk isn't actually going up that fast. So, you know, it's not the worst place. If you're a bit nervous about markets and you're waiting for weakness. You know, I've a high interest cash account. Put your thousand bucks a month in there. Allow it to accumulate until you've got a material amount and you feel good about markets or whatever the case may be. We are from investment management.

Bryce: [00:03:30] If you enjoyed that bite size, you'll find a link to the full episode in the shownotes.