“We are what we repeatedly do. Excellence then is a habit.” – Aristotle
Steve Jobs wore a black turtleneck top and jeans, Mark Zuckerberg wears a grey T shirt and Angela Merkel is always seen in a trouser suit. Why? They didn’t want to waste time each day choosing what to wear, there are more important things in life. Habits and routines are key to increasing productivity by:
Habits are rituals and behaviours we perform automatically, following the same pattern every day without thinking about them, brushing our teeth for example. The ‘basal ganglia’ is the area of our brain primarily responsible for motor control, motor learning, behaviours, and emotions. It plays a crucial role in habit creation and maintenance. Research suggests habits are so ingrained that we continue practicing them even when we no longer benefit from them.
However, sometimes habit and efficiency collide. Imagine you are emptying the dishwasher. You could simply put everything into one large drawer. Quick and easy, but hardly helpful. But if everything is in the same place isn’t that more efficient? You can just take out what you need when you need it? Or does it make more sense and ultimately more efficient to take time to put everything in its place, rather than wasting time looking through the drawer every time? Is having a place for everything and everything in its place a better habit to develop? We think so.
When it comes to developing good habits, here’s how we build our portfolios:
Our investment universe, a very large drawer, contains tens of thousands of funds. It is inconceivable we could review each item every time we create a portfolio (that job sits with our Investment Committee who undertake our reviews and recommendations). So, just as Steve Jobs had his ‘go to’ black turtleneck and jeans, we have pre-selected model portfolios.
One of our most engrained habits is to look after the pennies, and let the pounds look after themselves, so our solutions need to be very competitively priced. Our portfolios contain seven funds, proving less can be more as each portfolio contains around 10,000 unique global stock and bond holdings. In fact, our portfolios are provided at a lower cost than even the average tracker fund in the UK. (A recent Money Marketing report showed that investors on average pay 0.41%, with some funds charging 1.5% in ongoing charges each year for an index fund compared to our portfolios). Fund charges for our Wealth 50 portfolio (50% in equities) are just 0.34% per annum.
While our habits or “best practice” are developing nicely, we remain open to new ideas. Our recent Investor Survey results were especially encouraging as they tell us what habits our clients like, while also suggesting others that need a little work. So, watch this space!