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BLOG: Relationship goals? Try loving long-term investing

Nick Cheek
Written By:
Nick Cheek

Comparing the quest for romantic love to your investing journey can feel like putting a price tag on your Prince (or Princess) Charming. But the two have more in common than you think. Right now, for example, in the beauty parade of fund picking one sector a lot of people are swiping left on (for ‘leave me alone’) is Chinese equities.

Everyone hoped the Chinese market would glide through 2023 like a beautiful swan but, after a promising start, it has so far failed to get past the ugly duckling phase.

Beauty is in the eye of the beholder, of course. Sandy Pei, deputy portfolio manager of the Federated Hermes Asia ex-Japan fund, says investing in China is no quick fling. Over the longer term, “the Chinese economy is in the midst of a transformation, from an investment-led to a consumption-led model, creating a wealth of unique and compelling investment opportunities,” she says, pointing, for example, to the Chinese electric vehicle (EV) market.

So if you’re a bit of a risk taker looking for a long-term commitment, (with plenty of ups and downs), China may still be the match for you.

Finding a life partner you love is tricky. Ideally you want someone by your side forever but who can adapt to the ways you change and grow. Investing, again, is no different. You could, for example, get yourself a good core multi-asset fund, like BNY Mellon’s Multi-Asset Balanced, which sits in the IA Mixed Investment 40-85% Shares sector, and you can reliably build the rest of your portfolio around that solid foundation.

Even the financial regulator sees the similarities

As use of online dating and investment platforms has grown among young adults, the regulator, the Financial Conduct Authority (FCA), is exploring parallels to encourage better investment decisions. Because investing is, in many ways, like dating. You do your research and then take a punt on what you hope is a good-returning asset. There’s some risk involved, but hopefully it pays off in the end.

The FCA surveyed 1,000 young investors, who also use online dating platforms, to understand their influences, motivators, risk appetite and research approach in both parts of their life.

Young people, perhaps unsurprisingly, are putting more effort into dating than investing: just 31% of people were investing to earn more money than they would in a savings account, while almost half (48%) invest the time into dating to find a life partner. Their outlook for investment is also far shorter. Only 2% of those surveyed have a timeframe of more than five years in mind when investing and 14% have no timeframe in mind at all*.

Craig Bonthron, co-manager of the Artemis Positive Future fund, admits he can’t recall putting much rigour into finding a date in his 20s (“I was just pleased if someone liked me!”). But he says the responsibility needed for serious lifetime decisions like proposing or starting a family should carry over to investing.

He says: “If you’re buying equities, it should be a long-term commitment of at least six or seven years and the right choice could transform your future finances. So you should certainly choose with care.”

There’s value in the voice of experience in love and money.

David Coombs, manager of the Rathbone Strategic Growth Portfolio, has been managing money since 1984, way before the merry-go-round of Tinder. He has a fool-proof four point guide to navigating the choppy waters of investing while avoiding the sharks, just like when it comes to dating. Enjoy.

1. Youthful risk taking

When in your 20s, hopefully you have 60 years plus ahead of you, plenty of time to experiment and recover from mistakes. Yes, your date may not pass the parents’ suitability tests, but maybe they’ll earn millions as an influencer. The point is: now is the time to take some risk and invest all or most of your pension in equities. It will undoubtedly be volatile, but the end reward should keep you going ‘till you’re 80.

2. The attraction of experience

You may like to date a more mature person. Someone with experience and some financial stability can be attractive. An experienced fund manager may ensure your savings survive the periods of stock market volatility and should understand an economic cycle. You need to make sure, however, that he/she has a diverse team around them to ensure they understand Tik Tok is not just a noise from a cuckoo clock.

3. Beware the narcissist

An exciting confident individual will probably make the date fly by. Narcissism, however, is never attractive. In the investment world, exciting CEOs and fund managers can appear enticing but beware good initial performance can be followed by a crash. When investing, humility, longevity and stability are not sexy characteristics, but these individuals are more likely to be there for you when you need support as you get older.

4. Learn to love value

We don’t want dates to be flashy, but two halves of Carling and sharing a packet of Scampi Fries is probably a bit too austere. Looking cheap is not a winner, nor necessarily is a bulging wad of fifties. Authenticity and class are a good bet, or good “value”. A good active manager with a long track record will be more expensive than passive investing but they should prove their value over the long term and probably still be around for your Silver Wedding.

Juliet Schooling Latter is research director at FundCalibre

Juliet’s views and those of the fund managers are their own and do not constitute financial advice.