How to build a systematic portfolio with Stockopedia - Part 1

Friday, Feb 08 2013 by
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How to build a systematic portfolio with Stockopedia  Part 1

Getting started in the stockmarket 

Having taken the decision to invest directly in the stockmarket, investors face a plethora of tough questions about how to build and manage an investment portfolio. In the past, these perceived complexities have often been enough to drive even the most ardent DIYers back in to the arms of expensive and often poor performing fund managers. But there are relatively painless ways to manage your money using systematic approaches to the market, and using the tools available at Stockopedia, we are going to show you how to do it. 

This article is the first in a series of briefing notes that start at the moment you opt to take direct control of your investments. Throughout the series, we will examine the key things to consider when getting started, suggest proven strategies and show you how using our tools can help you to hunt down the shares that might suit you. We will also look at how you can go on to track and maintain your portfolio while keeping costs low, performance high and volatility under control. 

How much money do you want to invest? 

Although it sounds rather obvious, it is essential to consider how the size of your initial investment pot impacts your investment strategy. Regardless of whether you intend to drip money into the portfolio over time, if your initial investment is too small the costs of investing and managing a portfolio will be disproportionately high versus a managed fund. It may also mean that you end up running an overly concentrated portfolio (highly dangerous, unless you really know what you are doing). The larger your capital pot, the lower the relative costs will be and the more you can take advantage of the broader diversification that systematic investment strategies prefer. Here is why: 

Mind the costs!

Costs and fees can be a huge drag, eating up your performance. By opting to invest directly in the stockmarket you will be dispensing with the conventional costs associated with buying a fund. Advertised fund charges can be as low as 0.75% per year but in reality these cosmetically low charges can mask a range of trading or intermediary fees, which can inflate the typical costs to close to 4%. Casting off these charges is undoubtedly a major attraction but a self-invested portfolio does come with its own costs. These include: …

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Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


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About Ben Hobson

Ben Hobson

Strategies Editor at Stockopedia. My goal is to help private investors learn and invest with confidence through the articles, ebooks and other resources we publish on site. I also occasionally bunk off to interview famous investors at expensive restaurants. I studied History at Aberystwyth University, trained as a journalist and covered business news and corporate finance before settling in as one of the first staff members at Stockopedia.  Away from Stockopedia I'm a mountain bike junkie. more »

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