Illustrative reader · Maya
A large sum has arrived at once
Illustrative composite readers, used to open articles with a situation rather than a definition. They are NOT real people, NOT customers, and NOT case studies. Every persona page says so in its own text, because this site's credibility rests on never presenting an invented thing as a found one, and fictional people are the one invented thing we do publish.
Maya has come into a significant amount in one go, through an inheritance and a holding from her employer that has become a large part of what she owns. The money is real and the decisions are unfamiliar, and doing nothing is itself a decision.
Investing a lump sum against staging it, holding a concentrated position she did not choose, and which decisions cannot be undone.
16 articles written for this situation
The Advantages and the Real Risks of Index Investing
The case for indexing is strong and mostly correct. It is also usually presented as though the approach had no risks of its own, which is not true — and the risks it does have are unusual, because they come from the rulebook rather than from anybody's judgement.
Investing and market evidence · 4 min read
How to Choose and Evaluate a Financial Advisor
Choosing an adviser is mostly a process of elimination, and the disqualifying signals are easier to check than the positive ones. Start with what would rule someone out, because that is where the verifiable evidence is.
Behaviour and decisions · 6 min read
How to Choose an Asset Allocation for a Financial Goal
The split between growth and stability is the decision that determines most of what a portfolio does. It should come from what the money is for and what losing some of it would cost — not from an age, and not from a questionnaire.
Goals and asset allocation · 5 min read
Combining Broad Market Indices Without Fooling Yourself
Holding several index funds feels like more diversification and frequently is not, because the indices contain the same companies. Working out what a second index actually adds takes one question, and the answer decides whether you have built a portfolio or an expensive way of owning what you already had.
Investing and market evidence · 4 min read
Holding Shares Directly, or Holding a Fund
The comparison is usually framed as skill against convenience, which flatters both sides and settles nothing. The differences that actually decide it are structural — what happens when one holding fails, what the work costs you, and what tax does to the money you never intended to spend.
Investing and market evidence · 4 min read
How Financial-Advice Fees and Conflicts Affect Investors
Advice that costs you nothing is being paid for by someone, and whoever pays shapes what you are told. Understanding how the money reaches your adviser explains most of the advice you will ever receive.
Behaviour and decisions · 5 min read
How Much Diversification Is Enough
The benefit arrives fast and then stops. After a modest number of genuinely different holdings, adding more buys almost nothing while continuing to cost charges, complexity and attention — and past a certain point the complexity itself becomes the risk, because nobody maintains a portfolio they cannot see.
Investing and market evidence · 4 min read
How Diversification Actually Works
It is described as not putting all your eggs in one basket, which gets the conclusion right and the mechanism wrong. Diversification does not work because you own many things. It works because the things you own do not all go wrong at the same time — and that distinction decides whether a portfolio is diversified or merely long.
Investing and market evidence · 4 min read
Investing Abroad, and the Currency That Comes With It
Holding foreign shares gets you two things whether you wanted both or not: a claim on businesses elsewhere, and a position in a currency. They can move in opposite directions, and understanding which one you are actually trying to buy changes how much of it you should hold.
Investing and market evidence · 4 min read
When Does a Loan Against Investments Make Sense?
Borrowing against a portfolio looks like liquidity without a sale. It is liquidity with a condition attached, and the condition tightens at exactly the moment it is hardest to meet.
Borrowing and major purchases · 6 min read
How to See What Your Portfolio Actually Holds
A list of funds is not a portfolio. The portfolio is the combined list of companies underneath them, and it usually looks nothing like the fund list suggests — more concentrated, more repetitive, and quietly more so every year. This is how to work it out, with a spreadsheet and an afternoon.
Investing and market evidence · 4 min read
What Risks Does a Gold Investment Carry?
Gold feels safe because it is solid, familiar and has been valuable for a very long time. None of those properties is a financial one, and the risks it carries are specific enough to list.
Real assets and alternatives · 5 min read
A Lump Sum Has Arrived — Invest It or Stage It?
This is usually argued as though it were the same question as whether to invest monthly, and it is not. Most people never face it. Those who do are choosing between two things that differ less in expected outcome than in how it feels to be wrong, and that turns out to be the honest basis for deciding.
Investing and market evidence · 4 min read
The Particular Risks of Thematic and Sector Funds
A fund built around one industry or one idea is a bet with three parts, and most buyers are only aware of one of them. The theme has to be right, it has to not already be in the price, and you have to still be holding when it pays. The structure also tends to put the fund in front of you at the worst possible moment.
Investing and market evidence · 5 min read
What Should and Should Not Count in Your Net Worth?
Net worth is a simple subtraction that becomes misleading the moment you include things you will never sell, value things at what you hope they are worth, or forget the tax due when you finally cash something in.
Behaviour and decisions · 6 min read
Why Good Returns Do Not Make a Portfolio Safe
A strong number on a statement is a fact about a period that has ended. We asked what the trailing return looked like immediately before each large fall in the Indian record, and then ran the opposite test to keep ourselves honest. The result is not that a good run warns of trouble. It is something more awkward — the worst outcomes in the record came out of the portfolios whose past looked best.
Investing and market evidence · 5 min read