Big Small Money gives everyday savers and investors clear, practical guidance by translating the sophisticated strategies and real-world stories of major financial institutions into lessons they can use in their own financial lives.
Statistics from the Financial Conduct Authority suggest that less than one in 10 adults in the UK receive pensions or investment advice each year. Unfortunately, misunderstanding and misinformation often fill this gap. This can come from both social and traditional media, as well as our personal networks. Worryingly, the FCA also estimates that there are around seven million adults in the UK with significant cash savings who may be missing the benefits of long-term investing.
There is an urgent need for better financial information and education. My mission – and the goal of the book – is to help everyone achieve a better financial future, by demystifying the strategies of the world’s most sophisticated institutional investors. Along the way, we will explore some of the most fascinating and yet least well understood parts of our financial system, whose decisions and actions affect the financial wellbeing of all of us.
Chapter 1
Should I save now, or later?
How much to save, and when.
Chapter 2
What do institutions invest in, and what’s available to me?
Equities, bonds, real estate and more.
Chapter 3
Appraising investments with SYSTEM T.
A method to evaluate investments and avoid bad ones.
Chapter 4
Setting up for success
Stopping conflicts of interest and poor decision-making ruining your plans.
Chapter 5
Understanding and managing risk.
Measuring and managing risk using risk-layering, stress testing and more.
Chapter 6
The right sorts of risk.
How to take rewarded rather than unrewarded risks
Chapter 7
The investor’s crystal ball: where return forecasts come from and how to use them.
How to avoid some common pitfalls.
Chapter 8
Why and when diversification works (and when it doesn’t)
How to diversify your assets effectively.
Chapter 9
Finding the right combination of assets.
Achieving the best risk-return trade-off and how to deal with bad news.
Chapter 10
Matching and investing as you approach retirement.
Cash flow matching, value matching and Liability Driven Investing (LDI)
Chapter 11
When to invest in what: liquidity and time horizon-based investing.
Aligning short-, medium-, and long-term investments with your financial priorities.
Chapter 12
How not to be your own worst enemy.
How to stop psychological biases like overconfidence, herding and, loss aversion harming your investment decision making.
Chapter 13
Should I pay off my mortgage? The pros and cons of leverage.
Deep dives into the 2022 UK gilts crisis and looks at the pros and cons of paying off a mortgage early.
Chapter 14
Should I invest ethically?
Explores the three pillars of ESG (Avoid, Invest, Engage) and the debate over its impact on financial performance.
Chapter 15
Don’t pick up pennies in front of a steamroller and other lessons from equity options.
If you spend enough time working with equity options, eventually everything starts to look quite like an equity option.
Chapter 16
The case for cheap and when it’s worth paying more.
The active versus passive investing debate and how institutions select investment managers.
