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Bob and Sally. A Tale of two investors

I want to tell you a short story about a couple of investors, Bob and Sally.

Bob checks his portfolio values regularly, sometimes multiple times each day! Every time it has a temporary decline, he feels a sense of worry, anxiety and stress.

This makes him feel sad and he is not good company for his friends and family on these days.

Sally never checks her portfolio. She says there is no point as she cannot control it. She is aware when things are good or not so good, but understands the ups have been constant and decline temporary. A permanent advance.

Bob stopped his monthly pension contributions when markets got choppy. He said he would invest the money 'later' when things are 'better'. He never got around to making up the missed contributions and he failed to start his regular contributions again for years.

Sally has never stopped her monthly contributions. She has them automatically set to increase each year. She invested more when markets had a temporary decline recently, buying more shares in the great companies of the world.

Bob reads the mainstream news more than anything else. He even sets alerts to come up on his phone so he never misses the latest breaking news! He believes all the stories and shares them with his friends, especially the really bad ones.

Thankfully, his 'knowledgable' friend from the pub gives him tips on the latest hot money makers such as cryptocurrency, gold bullion and a unique opportunity to buy in to a luxury hotel resort being built in Cape Verde(!!).

Sally rarely reads or watches the news. She prefers to read and learn from history. Sally listens to podcast from experts in the things she is interested in and although some of her friends tell her stories of 'successful investments' she realises that they may be dressing things up a little to make themselves feel better. She always checks the legitimacy of any investment with her financial adviser first to ensure she doesn't get scammed.

Bob has on several occasions moved out/sold investments when they went down. He bought back in when it was safe and things had gone back up. He sold low, bought high. He still does realise that he is financially worse off, but he feels better anyway by taking some action.

Sally has never sold in over 3 decades of investing. She admits that she cannot tell the future. How is she meant to know when to get out and consequently, when to get back in? Her trusted adviser reads empirical evidence that demonstrates timing markets is a fools errand. Otherwise everyone be doing it and be billionaires, right?

Bob uses the latest 'hot' investment funds (as selected by a 'top 50 list' and 'best buy' tables seen in some glossy publications). He is also now using his 3rd 'fancy' restricted national wealth manager (he got fed up with the previous two when they 'lost him' money) and they have included some institutional funds, derivatives and hedge funds (although he is not sure what they are). Sure they charge 30 times more than you could buy the entire market for, but he is confident they will deliver this 'Alpha' they kept speaking of.

Sally uses a globally diversified, low cost portfolio mapped to level of risk she is prepared and needs to take for her goals as recommended by her long term caring, empathetic financial planner. She very rarely changes anything as it was set up correctly to start with.

Bob has no idea when he can retire. Bob has no idea how much he may need, or how much he may be able to spend. He'll work that out later. He has after all got 10 years before he wants to stop working.

Sally has put together a plan that estimates she will be able to stop working also in 10 years. She has plans to travel, spend more time with family and friends, help out at the local hospice and learn the piano. She has estimated how much her desired lifestyle is likely to cost and established with her financial planner's help whether she has sufficient resources to fund this. A financial plan. The future looks good and she feels reassured having gone through this each year with her adviser.

Bob has just bought a new car on finance (that he really can't afford). He also remortgaged last year to take the maximum equity out of his property, in order to buy another property to let out. He also has a few credit cards but he says he will pay them off when he sells his BTL as property 'always' goes up. He has no disposable money left to save as he is paying £600pm for his car and an extra £400pm on his mortgage.

Sally drives the car she has had for a few years now. She bought it from savings and has always lived well within her means and saved/invested the rest. She overpaid her mortgage and is now debt free. She is saving an extra £1000 per month in to her tax advantaged pensions and ISA as she realises that her financial independence will add far more happiness to her life, then say, a fancy new car, for example!

How did Bob and Sally end up I hear you cry!

Bob was able stop working so hard, eventually. But it was 20 years later, not the 10 he had hoped for.

A few bits of 'bad luck' with poor investments (turns out the Cape Verde thing was a scam!), a lack of saving regularly as he 'needed' that car, not to mention the high fund charges (that subsequently underperformed) and he is currently struggling to sell his BTL at what 'he thinks' it is worth (he also didn't realise he had to pay so much tax on purchase, income and sale!).

Sally, on the other hand, decided to stop full time work a bit earlier after 5 years, not 10.

She had invested wisely, consistently, avoided 'bad debt', bad investments and unnecessary high lifestyle costs. She also had a financial plan and a guide to help her achieve her plan. Boring, but effective.

Sally thought in decades, not days.

The moral of this tale is clear.

Don't be like Bob.

Be more like Sally.

(...And ensure you hire the help of a caring, empathetic lifetime financial planner to help you along the journey!)

Keep safe and stay home.

We'll get through this together.

Best wishes,


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