LSE 00:01
You are listening to Investing Matters brought to you in association with London South East. This is the show that provides informative educational and entertaining content from the world of investing. We do not give advice so please do your own research.
Peter Higgins 00:17
Hello and welcome to the Investing Matters podcast. My name is Peter Higgins and today I have the huge honour of speaking with the award-winning investment journalist Moira O'Neill, Moira was previously Head of Content and interactive investor, Editor at Money Wise, Personal Finance Editor at Investors Chronicle and Deputy Editor at Money Observer, Moira is now an independent freelance investment and money writer, Editor and Presenter and a Columnist for The Financial Times and a regular contributor to TV and radio programmes. feel very privileged to have you Moira, welcome.
Moira O’Neill 00:52
Pleasure to be here.
Peter Higgins 00:55
Now, Moira, you've had a fantastic career in the investment industry. As I said earlier, you've won awards for the work that you do. But I want to start this conversation if I may, going back to when you were a wee nipper. Right, and you were 12 years of age. And my daughter is now a teenager as well. So she wanted to be an architect and you wanted to be an architect. But then off you went to Cambridge University, did your degree and your Masters in Classics, and here we are, what happened between that 12 year old Moira to 20 year old Moira, what happened?
Moira O’Neill 01:25
The architecture dream was stopped by a work experience placement.
Well, that was saw the reality of it. And they didn't get to build wacky dream houses all the time, I gave up on that. And then I was influenced by a teacher, a Classics teacher who was absolutely brilliant and inspirational, as lots of people are, you know, teachers who can have a profound effect on you.
So, we've got all this is a wonderful world. And Classic is a multidisciplinary degree. So it's, you know, it gives you literature, art, history, language, archaeology, politics, philosophy.
So I thought, well, things I don't really know what I want to do. That sounds like quite a fun thing to do.
For three years or so off, I went and did that. And of course, at the end of it, I was a bit shell shocked, didn't know actually what to do as a career.
Anyway, having read up on a few career stuff. I thought journalism sounds really like my thing. And I fired off literally 300 applications to try and get some work experience, because that's super, super important to be able to practice it and to be able to get a job.
Fortunately, I got a couple and I got a job. And the job that I got was on Pensions World Magazine, which is was a bit of a baptism of fire, in terms of the financial industry, because it's a magazine that was not aimed at pensioners as I thought, but it was aimed at pension lawyers, actuaries, and all the technical people in the background.
So, the stuff I was editing and writing had to appeal to that dynamic. And that sector, the brilliant thing about that job was the first piece I was set to write, I had to go off on these things called trustee training courses.
So big pension firms have sort of lay people as trustees, and there was training being laid on for them, which would introduce you to investing to what a pension is to the possibilities of long-term growth, etc, the needs of people who are in the pension funds. And so that was great. So that really, really helped me get to grips with the financial world. And I think if I hadn't have had that experience would have found that job really difficult. I didn't know whether I was going to stick with financial journalism. But I think once you get to know a bit, you start to want to know more, and you get sucked in. And here I am, 25 years later, still doing elements of what I started out doing at the start of my career.
Peter Higgins 03:52
Absolutely brilliant, yeah, you said he was a baptism of fire, you go in working with the experts straightaway. So absolutely fantastic.
So, you were Assistant Editor at Pensions World, Editor at Health Insurance Magazine for a little while.
And then I'm looking at this as a big break here, Deputy Editor of Money Observer 2002 to 2008. Now that is seriously taken on some responsibility there.
How was that for you?
Moira O’Neill 04:17
Well, Money Observer was something that's my own father had been reading for many years. So I was very familiar with it. So it felt brilliant to get a job on that title.
Moira O’Neill 04:29
And also, it felt brilliant because I've been working in the sort of technical side the business-to-business writing. And I had a craving to write for consumers and to try and you know, communicate and educate and so Money Observer Magazine, which sadly, is no more but back then was fairly big on the new stands, as part of Guardian Media Group.
When I started there was sort of a brilliant place to be to have a dream job writing about investments pensions, tax planning, ISAs, and then some personal finance stuff like insurance, like mortgage planning all of that, but mainly on the investment side.
Peter Higgins 05:13
Brilliant. Yeah, fantastic magazine. And I was really shocked when it closed. I was like, what's going on here? Something's not right there, an absolute institution that was Money Observer.
So from there, you went to the FT, you became the Personal Finance Editor of Investors Chronicle Magazine that I've been purchasing for years now and formed my education regarding investing.
So I thank you personally now, whilst you're on the air, so thank you for that Moira, so you led the Investors Chronicle, we obviously became an award-winning finance team that you were part of, can you tell me some of the topics you've covered there and the growth and what you actually engendered because you did really switch it up a gear during the time that you were there for seven years.
Moira O’Neill 05:48
Well, I thought we needed to expand the coverage of collecting investments, so funds and investment trusts and ETFs as well, because Investors chronicle traditionally had a brilliant companies team.
So identifying, you know, good opportunities. But my expertise, or my the stuff I didn't know about was funds and investment trusts not really direct shares and the readers seem to have appetite for that we'd see reader portfolios, where people were mixing direct company shares alongside collectives, it was very much like not a, you either do one or the other people were mixing it up even back then.
And this is 15 years ago. So yeah, we decided that we do a lot more coverage. And we do our own recommendations. So I launched like a recommended list. So I did things top 100 funds, I launched that for Investors Chronicle. And we did it every year. And we got sort of a panel of experts in the industry that plus our own views to try and select the best funds across different asset classes, basically.
So our read us loved it, and it became a bit of a Bible. And then I decided that we've done that we ought to we've done the active funds, we ought to do the ETFs.
So we did a top 50 ETFs, couple of years later. And again, I spearheaded that, so it was sort of looking for the ones that track their indices best. And it was really a good piece of research.
And I expanded the reader portfolios, which we were told time and time again, when people opened the Investors Chronicle, the first thing they like to turn to was the reader portfolio, because they're inherently curious about what other people were doing with their money. And these weren't always like real names. And people could not be identified, we let people submit portfolios anonymously. So you would say, you know, this guy is 60.
And he wants to retire in two years, or he is a 28 year old, who's going to go into oil stocks or something like that. So we always tried to pick something that was interesting, and appeal to different parts of the readership. And then we would, we would be quite brutal sometimes about what we thought of, and how they could be improved.
I, for me, that was a bit of a labour of love, it felt like a huge honour and privilege to be given somebody's portfolio and select carefully a couple of experts to give a view and then inject my own view as well.
I just loved doing that. I probably did that for about seven years, analysing people's portfolios, and seeing you know, where people are getting it right, where people are getting it wrong, the same themes kept coming across, people like to collect stuff, and it's very, very hard to sell investments that you've held for years, and you're sort of emotionally attached to, we saw that thing coming up time and time again.
And there'll be like a long stream of things in the portfolio, that was all, each one was worth about 1% of the portfolio. And you think, well, it's not really, I know you love it, but it's not really making that much difference to your end outcome, if it's such a tiny holding. So always telling people to tidy it up, be brutal on here's what to sell. And if you're going to sell it, buy more of this one.
So that was fun, but also people holding things in the wrong wrappers, maybe you want to be thinking about holding different investments in an ISA different investments in a pension, trying to reduce the charges, because quite often, if you hold a whole load of random stuff that you've collected over the years, you end up with higher charges, and you might have or you might be holding the wrong share class of the fund. So there are lots of people to have a lot of legacy funds that had high charges on them.
And we would say, you know, you can hold the same thing managed by the same fund manager but with a lower charge, and here's what to switch to. So yeah, it was fascinating, that job.
Peter Higgins 09:46
Brilliant that, I love that reply, I’d love to come back to some of the points that you've made there a bit later on. And I want to go back there's a very important that in the middle of your time at the Investors Chronicle slash the FT. And that was the Wincott Foundation Award that you got Moira.
You did some heavy lifting regarding a piece of work that you did or wanting to share the importance of that work and why it was recognised by the Foundation?
Moira O’Neill 10:06
Well, I mean, I entered a few things for that award. I think you get to enter three we did back then. So I should have showcasing some nice writing or showcasing gosh, it was like, I think it was an income investment piece where we'd analysed income from investment trusts alongside dividends. I can't remember exactly back in 2011/2012.
Peter Higgins 10:28
The wording that I've got here, the judges said Moira is diligent and painstaking analysis and ranking of unit trusts is the kind of heavy lifting we expect from the Investors Chronicle. And she combines this with readable and accessible copy across a subject, her articles are valuable, both for professional and non-professional investors, a model for what personal financial journalism should be aiming at.
Moira O’Neill 10:51
Aw thank you. That's very nice to be to read all of that out. When I'm having a down day, I go back and read that comment from 2012 Wincott Foundations.
Peter Higgins 11:04
You set standards, that's what it’s all about.
Moira O’Neill 11:06
Yes. I think we had entered the top 100 funds for that. So they love that they loved the analysis that went into it. I mean, it was probably about 10 pages of the Investors Chronicle that I took over for that.
So it was a big piece of research. But you know, wonderful to win an award. It's the big one in my sector. And it was brilliant to get the recognition. Yeah, thought job done really.
Peter Higgins 11:32
Absolutely. Absolutely. Cool. So after the FT, some other people came looking for you. And you became the editor of Money Wise, another fantastic magazine of its day, and you moved over to there.
And you've redesigned that magazine and relaunched it. And you went to the website as well.
Moira O’Neill 11:48
Yeah, yeah. Money Wise, was wonderful in a different way, is trying to make everything as engaging and as accessible as it possibly could.
Because we thought, you know, people will pick this up this magazine, knowing nothing about money stuff, they were being something on the cover will have appealed. And we want them to find that it's visually engaging, and it's got brilliant pictures, graphs, everything, infographics in a proper magazine experience relating to money in its broadest sense, because we didn't do a huge amount of investment coverage from Money Wise, there was a lot of how to be smart with energy bills, you know, this sort of the Martin Lewis type of money saving.
Yeah, so it was brilliant experience. I loved bringing us a creativity and an energy to money and trying to always improve visually, what we did in the magazine and on the website, too, because you have to relaunch that. Yeah, but sadly, Money Wise is no more either. All these things I've worked for in my career.
Peter Higgins 12:54
I know it's such a it's such a shame.
Moira O’Neill 12:55
Yeah. But it's served its purpose. I think the problem with print magazines is they do rely on advertising. And if you're not served so well by the industry, then you can't really sustain it.
Peter Higgins 13:09
Then on to Head of Personal Finances, interactive investor, which is where you were up until last July.
And again, there, you shook things up there as well headed up content and investment research and Public Relations for business, you know, you did quite a lot of work, do you want to share some of the nuances of what you're doing there, because we went from seeing ii as quite the small sort of entity that was doing a lot of different things. But all of a sudden, we saw them actually being very proactive and a sense of, especially during lockdown. So more and more. I don't like using the word content, because it's such a lower bar to set, but lots of different information interacting, interactive became interactive, if I can use that analogy.
Moira O’Neill 13:46
Yeah, I mean, that was the goal, we set out to do sort of campaigning PR, basically. So let's see how we want to change the investment industry for the better.
Let's see what we can do as a business to help investors and we have some big campaigning successes. So one was on shareholder democracy, that's a really big, important theme for us.
So that's encouraging people to get involved with the investments that they own, and to take ownership over those decisions.
So to make sure that the companies that they invest in or are doing good things, whether it's on the environmental, social or government inside and to wield their power as a shareholder and to vote on the shares when they get an opportunity.
Yes, we were really encouraging people to do that and trying to promote the kinds of issues that come up.
So yeah, it was pretty successful. And then we know we really campaigned on financial education. So we ran something called the Personal Finance Teacher of the Year Awards, which was a real labour of love to try encourage teachers who are really time poor to enter an award, but we managed to keep that going.
And to get some absolutely brilliant entries from all around the country showcasing really engaging lessons that were to educate young children and secondary school aged children, because we had two categories about money. And some of them were just so fantastic.
They would use things that really appeal to children. So like, though, teenagers that would be their phone, or how much does it take to get hair extensions and this kind of thing and use it in real life scenarios to educate them about getting into debt about things they want, or need, and sort of healthy money habits.
And then the primary school age, some of the entries from those are super brilliant. So, you know, like the infants, we saw brilliant things done about planning for a baby coming into the family, and what does the baby going to need, nappies and things, and how much is that going to cost?
And how's mum going to save? It was really lovely. And because imagine being a fly on the wall in those lessons, and just seeing the kids really engaged about money stuff. And really importantly, some of the schools that were involved with said that by introducing personal finance education into their schools, they'd seen positive effects across the board.
So they've seen improvements in results, there was one school in a quite a deprived area near Peterborough that had introduced a currency for the school, so the kids could earn points towards the school money, and they could then decide how to spend that.
They could also decide how to spend money as a school. And it was really, really motivating within the school that there's this focus on it as a personal finance project across the school and the results improved. It's just amazing. The motivation, everything. It was a very charismatic teacher pioneering that, but even so, to see money having such a huge effects on the school itself was brilliant. Just need more schools to embrace it.
Peter Higgins 17:08
Yeah, so massive issue, I think, I think the more that we actually impart and educate children of all ages, going all the way from infancy, as you say, up to teenagers and into university, about personal finance education, I think no better would be because they have a level of indebtedness throughout the country, and even in institutions, which we shouldn't have. And people are now in a difficult spot now where I've seen interest rates rise, the savings if they've got any, aren’t in a race in the same pace as the interest rates are rising, and we've got difficulties all around at every level.
So the more that we can educate within schools, I think it's a massive piece that we're missing. We should have that throughout schooling, I think as a mandatory sort of subject.
Moira O’Neill 17:46
Yeah. And of course, you know, auto enrollments being extended to younger children now.
So pensions, is coming in at a younger age.
Hurray. So you started job 18, you'll be enrolled into the pension scheme. And that's a brilliant step forward. It used to be it was 21 it used to be, so people will face this long-term growth and the power of compounding earlier on.
And if they can understand the power of compounding, they'll know they really do need to be in that pension scheme.
I was just looking back, one of my regrets is not putting in as much as I possibly could in my 20s into my pension, because I'm now approaching 50. And looking at my pensions that I had that I was contributing to back then. And it was brilliant looking, you know, yes, you know, all that compounding is really powered up and delivered.
And you know, I wish I'd put more in because those years and 20 to 30 can be crucial. I think there's an illustration, there's a famous money anecdote, which is Jack and Jill. And Jill who's the sensible one, it's always the woman isn't it, because the same amount every month during her 20s. And so for 10 years, and Jack doesn't Jack doesn't put anything in during his 20s, Jack starts at 30 and puts in the same amount of Jill has done.
Jill stops at 30 and just leaves it and Jack and Jill when they both reach 60 Jack's had to put on a huge amount more than Jill but because Jill put it in earlier than he did. She's in a better position. And I just love that story. I think it just showcases why we need to put even small amounts in at the start.
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Peter Higgins 19:51
Want to touch now if I may, and I'm going to go back to some of the points you've made a bit later on.
You're an advocate for investing. You're an educator regarding investing and personal finance.
And from what I've read, you're a believer in a diversified portfolio.
So I want to take this time now to talk with you about your investing strategy, and how you've gone about over the past, you know, your working career, saving and investing your strategy, best lessons learned, you've already talked about one of the regrets there a little bit, and just educate our investors about the prudent way that you've gone about managing your money as best you can thus far.
Moira O’Neill 20:29
Well, I mean, I'll start by saying I'm not really done much dabbling in direct shares, I've always stuck to collective investments, where it's rationally managed by a fund manager.
And I've tended to favour Investment Trusts over the years.
So these are known as the city's best kept secret, aren't they, they're the types of funds that fund managers want to manage, because they have more control over the investments.
So they don't have loads of money coming in and out at random. And there's about 500 odd investment trusts, suddenly going for hundreds of years, this is you know, they're very, very well established.
They're good at paying out dividends, that they're a bit like buying shares in a company that its ethos and goal is to invest on your behalf. So the like mini companies really, yeah, and I just built up portfolios of those over the years, I do tidying up, I like to tidy up things along the years, I like to sort of buy ones that have gone down and sell a bit of the ones that have gone up.
I've never had a foolproof system, I'm not going to say supposedly an expert, but you know, we experts don't always do it absolutely brilliantly ourselves, but we kind of know the principles to follow.
So we try and keep our asset allocation. So the building blocks of the portfolio, fairly sound. And I've always held the bulk of it in equities. I've always been on the high risk end of that. And I've always tried to keep the costs down or my investments.
So I've been a great fan of something called core satellite, which is why I have the absolute bulk of your investments in a really, really low cost tracker funds, or collection of tracking funds.
And then you have the interesting bit satellites around the edges, things that you think will add value. And that's where I tend to pick investment trusts. Yeah. And it's been great to see over the last 25 years, the charges on investments come down. So particular tracker funds, I think back at the start of my career, they were all charging one and a half percent. And now you can get 0.15% and get a decent Vanguard tracker fund.
And those reducing those charges can have a really positive cumulative effects over the years. So it's always something I think every year when I do a bit of review of my portfolio because I don't do it like every month or every week or every year, I have a good trawl through it all. I try and reduce costs, basically. So there's anything cheaper or better value out there that I could buy instead of what I'm holding already.
Peter Higgins 23:09
Cool. So with regards to you mentioned the investment trust, and you touched on the importance of dividends and compounding, dividend heroes, you've been around, you've been investing for a little while. Do you have any of the dividends or heroes in your portfolio? Have you kept some of them, Moira?
Moira O’Neill 23:23
I do. Yes, I've got City of London (CTY), the UK portion of which…. I've interviewed Job Curtis is the fund manager over the years is a lovely guy. And he speaks complete common sense. And a really simple way. I always think that people speak and translate things really well. They must be amazing and clever, you have a certain amount of sort of brain that can translate things into very into good sound bites and can help you understand what's going on anyway.
So he's one of those, and he's delivered really well over the years for me. And then I hold the oldest Investment Trust, of course, I hold F&C (FCIT), which has been going for well over 150 years that's globally diversified. It holds bits of private equity as well.
So it's gives you sort of an asset exposure to an asset class that I wouldn't be holding otherwise. So yeah, they're two of my favourites.
And I was talking to my husband the other day about investing, and those two came up because I was thinking, you know, he really needs to get going with this stuff. And I said, we just check these two out, because I think they're solid things that you can hold for the next 10 years.
Peter Higgins 24:32
Brilliant. Thank you for that you took some of the charges side of that as well. But I want you to expand a little bit if I could ask you to about why it's important for all of us to consider investing in the most tax efficient way as well because obviously we're all getting taxed left right and centre, but we should also maximise the tax efficiency of our savings and keeping it in a wrapper of sorts.
Moira O’Neill 24:53
This was illustrated to me last summer I went on a camping trip with some parents and my childrens’ school and my two kids as well, we were basically taking the kids camping.
And one of the fathers wanted to talk to me about investing. And he said he'd had some great success during the pandemic with Tesla. You know, he piled into it. It was quite a wealthy guy, and it done really well. And then he was dealing with the tax bill. I was like, why are you dealing with a tax bill?
He said, Oh, I have you been I'm not going to name the platform. But had been on one of the newer platforms, which didn't offer an ISA.
So he hadn't been holding Tesla sheltered from capital gains tax, basically, just because he didn't know he should. And so he got this big tax bill to pay 20%. At the end of it, yeah.
So if he'd held it in an ISA, in an Individual Savings Account, he wouldn't have had any tax to pay on the growth. And that's really important. And obviously, that applies to income investing as well. If you've got shares or other investments that provide an income in the form of dividends, or coupons, or whatever it is, then an ISA stops you paying extra tax on those.
So it's a really good place to do it, but pensions do the same for you.
So if you hold if you can afford to stash your money away and lock it away in a pension, because that's effectively what you do, you can't get the money out of a pension until you're 55 at the moment, and it may that age may go up.
So a state pension age increases the private pension age for access might increase, well, you have to be a bit wary of that.
So if you locked your money away into a pension for that long, it can grow free of the income and capital gains taxes that you would otherwise have outside of pension.
Of course, the beauty of putting into a pension at the moment is you're getting up from income tax relief on your contributions, which means you get like free money from the government when you put the money in. And so you can reduce the income tax that you're paying this year, by putting your money into a pension, you will pay tax when you come to retirement, but you might be on a lower tax rate by then.
So it could work out really efficiently for you. Yeah, so use ISA and pensions to the max is the message. And the allowances for them are really generous, you can put 20,000 in an ISA, you can put up to 60,000 in a pension after the chancellor up raised it from 40,000 in the latest budget.
So I think for most people, that's sufficient. You have to be very wealthy to be able to bust those allowances for your investments.
Peter Higgins 27:29
Yeah, I was going to touch on this later. I'll throw it out there now. And there's a term that I saw, which I haven't seen before, and it was used casino politics and the constant chopping and changing of rules and thresholds. With regards to pensions and retirement planning, if qualified professionals in the investment industry struggling to keep up what hope is there for the ordinary private investor to know what to do with pensions, Moira, is just keeps changing every six months to a year, doesn't it?
Moira O’Neill 27:53
It's very confusing. People don't trust the policy. As a result, there have been some cross party projects to try and get pensions policy fixed for the next generation.
And they haven't really failed. There's still this constant tinkering with whether its lifetime allowance cease to be tinkered with now it's been scrapped, but labour say they'll in reintroduce it. And you know, the constant, how much you can put in, people just worry that the revenue will come and take a chunk when they reach retirement.
But I think the sanguine sort of reasoned approach is you can only deal with what's there at the moment.
So you have to just keep going and using these tax efficient allowances because it's far better to use them what's available now and have the risk that a future government might take a chunk out, but they're not used them at all now, and big guaranteed chunks of investments are going out.
So I think that's my message is you need to use them and write to your MP and say raises an important issue.
So we mustn't tinker with these allowances are so important. If we've got to be if you're going to reduce any changes, we need adequate notice of that.
I think the example of people not being given adequate notice on pensions is the what's called the WASPI Women. So the women who were told with very little notice that their state pension age was going to rise, apparently the government claims it did communicate this but it obviously didn't communicate it very well.
So whatever was posted out to people or were put on government websites didn't get through to the people who were going to be most affected by it. And I think any major policy change, people need 10 years to plan for it. Sometimes. I think that's adequate notice is 10 years that the state pension age is going to change or the private pension age is going to go up or we're going to reduce this allowance whatever it is, give people adequate time.
Peter Higgins 30:03
Yeah, I absolutely agree with you. And you've always been from the material I've read that you've put out historically, and advocate for more women to take control of their own financial destiny, and invest more, what could the industry do more Moira to encourage and educate women more to actually invest more?
Moira O’Neill 30:20
Well, I'm very against what I call the pinkification of financial services.
So I don't think women need bespoke websites or anything like that, or they don't need to be spoken to in a different way. But what they do need is jargon free things explained in very simple terms.
I think everybody needs that. It's not just women, I think the industry just needs to communicate better. And to also give I think, events where there are safe spaces in which women can talk and raise questions in an environment where they're not going to feel patronised.
They're not going to feel like they're asking the dumb stuff, or whatever it is, I think those can be really successful and reassuring. I've been trying to create those with my own peer group, my own friendship groups recently. Let's have a coffee, cake or glass of wine. And we'll sit and we'll talk about pension stuff.
And you know, I'll give you some useful resources. And you can ask me the questions that you need.
So I've been doing a basically a bit of financial mentoring. Women come away from that feeling empowered, it's in quite a lot of firms doing this, but they're not financial providers.
They're more of events firms doing it. And I think it's it can work really, really well.
Yeah, I just think young men I saw on the Investors Chronicle would go gung ho to investing thinking they are masters of the universe, and buying whole load of high risk stuff that was obviously going to end up in disaster.
But at least they were going into it gung ho, but women don't ,I know I am stereotyping, but they take a much more reasoned approach to it.
So they want to understand it really well before they step into it. And I think that's what holds people back. They don't want to risk it so much thing is, once women are investing, they invest very, very similarly to men.
I mean, there's no real evidence that the sexes do it differently. It's just taking the steps in that's different. I think once you got a portfolio together, you'll find women make really sensible decisions. They hold things in a fairly similar proportion to the men, we saw this on interactive investors’ website, and we had 100,000 customers, we were qualified to talk about it, they really didn't invest very differently to the male cohorts, they're just fewer of them.
Peter Higgins 32:51
Yeah, however, the research shows that over the long-term, women outperform their male peer group regarding investing over the long-term.
So could the investment industry do with and have a role to your future as they invested in female investors and also had more female fund managers?
Moira O’Neill 33:07
Oh, gosh, yeah, desperately need to see more of those. There's the horrible Morningstar survey, which said there are more, it's a couple of years back. So there are more fund managers called Dave than there are female. But that's horrifying.
I think yeah, I mean, yeah, you need to the industry needs to model it need to have female spokespeople, female professional fund managers, female financial advisors, you know, it's diversity and inclusion, got to model everybody's involved. It's not just the sex difference. There's also so many different social strata, there's ethnicity, all of that needs to be role modelled within the financial services industry, to make it universally appealing to different sections of the population.
Peter Higgins 33:53
Absolutely agree with you. Now, I'm going to just change this slightly because I was going to ask this question much later on, we get to sit on a very perfect point and send you for this segway to this question.
You contributed a fantastic chapter to the wonderful book, Inspirational Investing. What matters in the world of investing for women by women, edited by Amanda Taylor, alongside some amazing contributors that include: Annabel Brodie-Smith, Rosie Carr, Rebecca O'Connor, Miriam Somerset Webb, Kalpana Fitzpatrick and Claire Barrett now can tell us a little bit about your chapter without giving away too much about the whole book that’s trying to inspire not just women, but everybody to invest per se?
Moira O’Neill 34:34
I have to remember what I wrote, I think I wrote about risk, didn’t I?
And it was about how investment risk differs from our normal understanding of risk.
So in everyday life, you went rock climbing or skiing or bungee jumping, that would be a risky thing to do or if you were into renovating properties or whatever it is, there are the things that you can think that's something high risk person would do.
Investing, taking a high risk means putting your money into something that can be volatile that will go up and down over the lifetime of your investing.
But the thing is, you can effectively reduce the risk of those high risk investments by holding them for the very, very long-term. So if you know something's going to be volatile, over the next few years, if you hold it for 30 years, the graph with all the bumps in it actually looks quite smooth.
So it's understanding investment risk, maybe we need a new term, people can lower their risks by doing some of the sensible stuff with investing, you can spread your money between different investments to lower your risk.
There's all sorts of things you can do. But you might still be labelled a high risk investor, but you're doing the really sensible things.
So for example, if you're in your 20s, and you're putting everything into equities, which are the highest risk type of investment, that is a really sensible thing to be doing as long as you're locking the money away, and you're not going to touch it, and you're not going to need it next year. But people aren't encouraged to be high risk. So they need to educate themselves to understand what that means in terms of investing.
Peter Higgins 36:17
Thank you very, very much for that. Now, you've talked about risk and volatility. Now, one of the Mainstays that we see a lot you talked about earlier about people chasing trends and all the rest of it and keeping lots of different new things in their portfolio and being over diversified.
As an investor, what is the best way to combat fear of missing out? We've seen a press all the time FOMO we've seen what's going on with the shockwaves. That's happening regarding banks now, how would investors best combat FOMO? In your eyes Moira?
Moira O’Neill 36:45
Well, this FOMO. And there's also fear isn't that there's two different things going on here.
Peter Higgins 36:49
Yes, they're very close together, psychologically.
Moira O’Neill 36:51
Yeah, it's all about the noise that's going on around you. And people saying, oh, it's a good time to get in, or it's not a good time to get in, everybody will always have a view, they'll always be a reason not to invest, whether it's war COVID, the biggies, or it's just a cab driver tells you he doesn’t like M&S shares, or whatever it is, there's always something there's a reason not to, or you are feeling nervous, because something else going on in your life, you know, like thinking, oh, I should put that money away, because the kids might need it, or whatever it is.
And then there's also that you don't have fear of missing out, I think, missed opportunities, or not timing it right, or whatever it is, and feel like, oh, I shouldn't invest in Tesla, because it's already gone up so much, I think, really combat this by selecting a sensible diversified portfolio of investments, and drip feed your money in.
So put the same money amount of money in every month, and it comes out at your income or your salary. If you're self-employed, you might want to just do it less regularly.
But you know, make sure that it is regular, and just let it build up. So you pay yourself first to get used to not having that money, and you put it into a sensible set of investments. And don't check it too often.
So don't check in every day to see whether it's gone up or gone down. Because that will make you feel like you've got to act on it. Just leave it check in every few months. You can even leave it and check in on it once a year happy with the building blocks that you've put in place, and just let it grow over time.
Peter Higgins 38:31
Love what you said there, there's a bit they said there's been all I needed to go back to that. Pay yourself first you said there and the beauty of Pound cost averaging together absolute marriage made in heaven for achieving financial freedom.
So yeah, I love that phraseology that you put there. Now where I'm conscious of time. So I've got two last questions for you. And I want you to go back really and reiterate to our private investors, professional investors, institutional investors, and the global Investing Matters audience what really truly matters to you regarding investing. What's the most burning and most important thing regarding it all for you?
Moira O’Neill 39:11
I'm going to say charges, keep your charges low. I mean, that's for your sake. And it's also because the only way we're going to make this industry change. So there are layers of charges that go on and just watch out for them because you don't want to pay for somebody else's yacht, you really want your own yacht in retirement if you can have it.
Peter Higgins 39:32
Brilliant. Love that reply now have fun question to end with Moira for you, I'm going to bestow upon you the powers to change something, anything that will enable the advancement and betterment of your two teenage children and the whole population or planet of Earth. What would you change and why? I've given you the wand you can do whatever you want.
Moira O’Neill 39:54
So I'm going to go back to pensions policy and just say make sure that it stays that we don't have changes so people can deal with what they have and know it's going to stay.
But I'd also like to see a bit of simplification in pensions because it's hugely complex, difficult for people to understand. And I also like to see some education on the amount you need to put into a pension, because auto enrollment is about 8% of your outgoings. And it really needs to be higher needs to be 12% for people to have really good retirement outcomes. So I think there's an education piece to be made.
Peter Higgins 40:39
Brilliant, that's absolutely brilliant, it's been an absolute joy to have you on Moira. I'm looking forward to seeing you doing all of the work that you do.
Going forward freelancing now you still columnist with The Financial Times as well, and the Weekend paper as well. And we're going to see you at the Master Investor Show.
And I want to keep in touch with you because I've got some ideas regarding how we could actually collaborate with regards to London South East and Investing Matters to encourage more and more people to be prudent and carry on educating them so if we can keep in touch that would be absolutely great.
Moira O’Neill 41:13
Great. Yeah. Love too, it’s been fun talking.
Peter Higgins 41:15
All right. Thank you ever so much. That was Moira O'Neill, the award winning journalist, and we're going to see much more of Moira going forward as we continue our drive to educate others. Moira, thank you so much. Take care God bless.
Moira O’Neill 41:28
Pleasure, bye.
LSE 41:38
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