When I began this column back in May, I bemoaned the turmoil inflicted on my investments and home life by my wife’s brilliantly conceived kitchen extension.
Many of you, it seems, share my pain — at least in part.
Your spouse might not have scurried to work, abandoning you to a houseful of builders, but you do feel your investments need a structural overhaul.
You made good decisions 20 or 30 years ago, investing in Peps, pensions and Isas, but life took over. I asked some experts for their thoughts on addressing a stale portfolio.
Check first: Several websites, including Morningstar, Trustnet, Hargreaves Lansdown and Fidelity allow you to compare the performance of funds with their benchmark
Laith Khalaf, a senior analyst at fund supermarket Hargreaves Lansdown, says: ‘Look at the performance, charges and risk. Focus on the basic things you can control, such as tax-efficiency and balance.’
In other words, decide whether you are making enough money, being charged too much and how comfortable you are with the risks you’re taking.
When it comes to performance, there are simple tests. If it’s a UK fund, has it delivered more than the FTSE All Share?
This index essentially represents the average return you could have expected from the UK stock market.
Global funds can be compared with worldwide indices such as MSCI World or S&P Global 1200.
Several websites, including Morningstar, Trustnet, Hargreaves Lansdown and Fidelity allow you to compare the performance of funds with their benchmark (i.e. similar funds), a stock market index or, in some cases, other funds of your choosing.
I like Legal & General’s FTSE All Share tracker for a neat, low-cost comparison to UK funds. If your fund hasn’t delivered over the long-term, check how it’s done recently before ditching it.
You’re most likely to be in a wreck of a fund if you were flogged something by your bank or insurance company.
Take Scottish Widows UK Growth, a £2.8 billion monster that Lloyds sold through its branches.
Figures by Morningstar show that, over ten years, it has turned £1,000 into £1,726, ranking it 169 out of 184 similar UK funds.
Meanwhile, an alternative that was popular at the time, Fidelity Special Situations, turned £1,000 into £2,635.
Next, charges. A lot of the big bank and insurance company funds basically shadow the stock market, but charge a premium price for doing it.
The candid money.com website has a calculator that shows how those charges erode your money.
If you’ve got £100,000 saved and it grows by 6 per cent a year with a 1.5 per cent fee, you would after 20 years have £241,175, having lost £79,539 to charges.
Cut that fee to 0.5 per cent — the most you are likely to pay for a tracker fund that simply follows the market — and you’d have £291,773, with charges accounting for £28,941.
It’s up to you: pay big fees and buy a yacht for your fund manager or pay low fees and fly business on your holidays.
The final point is risk and, for that, you need to know what you’re holding.
Rebecca Robertson, an independent financial adviser at Evolution Financial Planning, says: ‘There is a lot of jargon in our industry and the fund name may not reflect what it does.
‘It may even be a series of numbers. So ask the manager what it is supposed to do and what it’s investing in. Aim for a good mix around the world and of different types of assets.’
Tom Stevenson, investment director for personal investing at Fidelity International, says: ‘A sensible approach would be to build a well-diversified portfolio that blends riskier assets, such as equities, property and commodities, with lower-risk assets, such as bonds and cash.
‘Once you have your portfolio in shape, you can’t just ignore it again. A review once a year should be sufficient, as you don’t want to fiddle too often.’
If you’re approaching retirement, you may want less invested in riskier funds. These won’t give you table-topping returns but, as part of your portfolio, they could offer some protection if the markets turn.
If you don’t plan to monitor your investments, then trackers can control the fees. Legal & General ones tend to be cheap, as are some from Vanguard and M&G, among others. If your tracker costs more than 0.5 per cent a year, you’re paying too much.
As retirement nears, income becomes more important. Income funds have struggled, but they’re still part of my portfolio.
Mr Khalaf mentions Artemis Income, Newton Global Income and Jupiter Income. I hold the first two. How many funds do you need?
Ten to 20 for the average portfolio, he says, adding that you should not have more than £50,000 in any one fund.
The toughest decision is likely to be on any fund that has had a brilliant run and now makes up a far bigger proportion of your portfolio than you had planned.
You may wish to stick with it, or sell some and put the money into another fund to rebalance.
That’s a happy dilemma and, I’m afraid, you really must decide that for yourself.