Why millennials don’t need to love maths to be good at investing

Staci West 23/07/2019 in Millennials

Maths was always my best subject in school. I took Advanced Algebra and Trigonometry for fun when I was sixteen. At nineteen, I voluntarily enrolled in my second Physics course – maths, science, I loved it. While I didn’t initially pursue a career with numbers, it did give me a unique perspective on my finances: it’s my way of continuing to learn and engage with maths on a daily basis. But what about those that are scared of maths or hate numbers?

‘Logic and mathematics are nothing but specialised linguistic structures.’ – Jean Piaget, Swiss psychologist

Hating maths is not an excuse for poor money habits

You do not have to be good at, or even like, maths to be good with money. It’s simple: spend less than you earn. No numbers, just some common sense. Not to mention there’s an app for everything. If you know how to use your phone, you can figure out a simple budgeting app and, with challenger banks like Monzo categorising your spending for you, there’s help everywhere you look to tidy your finances.

If you are having a hard time getting past the number aspect, relate spending to something else like “If I cut my Starbucks habit, I could save money and retire earlier”.

Leave the numbers to the professionals

When numbers aren’t your thing, and asset allocation and portfolio diversification sends you into a cold sweat, do what every good professional does: delegate. Delegate those areas to the professionals – whether it’s speaking to a financial adviser or opting for a multi-asset fund, it will put your mind at ease and you can get back to focusing on what you do love.

Investing in multi-asset funds means you can nicely diversify your investments, but the fund manager alters the amount invested in each asset class depending on the prevailing market conditions – meaning you don’t have to worry about what Brexit is doing to the pound, or what Trump’s latest tweet is doing with trade war tensions.

Learn how to take advantage of your ISA allowance this year

Whether you’re a risk-taker or risk-adverse there’s a multi-asset fund out there for you. Funds that sit in the Mixed Investment 0-35% Shares sector are generally considered the lowest risk within multi-asset sectors because, as the name suggests, at a maximum they can only invest 35% in equities. Remember equities are what we’re talking about when we own shares in a company. Elite Rated Jupiter Distribution is one such fund in this sector and is designed to appeal to the risk-averse, while delivering a regular income.

If Mixed Investment 0-35% can invest up to 35% in equities, then it’s logical (not mathematical) that Mixed Investment 20-60% Shares funds can invest a maximum of 60% in equities and must have at least 20%. The number of different assets the funds invest in can vary from fund to fund, so when doing your research it is important to read the information about each one carefully. For example, Elite Rated Artemis Monthly Distribution fund invests solely in a combination of equities and bonds. Elite Rated BMO MM Navigator Distribution however, gains exposure to many different asset classes by buying other funds: this is sometimes referred to as a ‘fund of funds’.

Watch our recent interview with Steve Andrew from M&G Episode Income to learn how this multi-asset fund uses behavioural finance to find investment opportunities.

If you want more risk, you may want to consider those funds can can invest 40% to 85% in equities, such as Elite Rated Jupiter Merlin Balanced. Headed up by manager John Chatfeild-Roberts, the fund currently holds 77%* in equities. It is run by the same team behind Jupiter Merlin Growth, which is in the flexible sector meaning it can invest in several different types of asset classes without the formal equity constraints previously mentioned.

Looking for a fund that invests directly in companies, as well as other funds? Neil Birrell, manager of Premier Diversified Growth, recently told us how he’s finding opportunities in the gaming industry.

The final type of multi-asset fund you may come across are those in the “Volatility Managed sector”. Similar to the flexible sector, these funds can invest in several different asset classes without equity constraints. However, their goal is to manage returns within specified volatility parameters. One such example is Rathbone Strategic Growth Portfolio, which aims to hold around two-thirds equities – currently the fund has a 58.43%** allocation to shares.

Still intimidated by maths

I know, I know, that’s a lot of percentages for something that’s meant to make you like maths, but a good rule of thumb when looking at multi-asset funds is the more equity exposure, the more risky it is, and vice versa. When it comes to asset allocation, diversification, researching companies and behavioural finance, leave it to the professionals running these multi-asset funds.

Inspired to make your first investment? Read our 60 second guide on how to get started


*FE Analytics at 28 June 2019
**Fund factsheet at 31 May 2019

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice. Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.