A bit of (summer) spring cleaning

The first thing I’ve been doing is reviewing my portfolio and checking that I’m still content with the stocks I own.

Notice that I said ‘content’ rather than ‘happy’. As a general rule, we focus on the long term here at Fool UK. Put another way, we tend to err on the side of sticking with investments if the outlook isn’t too ghastly. This is because it’s value rather than emotions that ultimately drive returns.

Sure, this will always be a judgement call to some extent. No one truly knows where the price of any stock is going.

If there’s been a fundamental shift in a company’s investment case however, I might be inclined to sell. Things could go from bad to worse if general market sentiment tumbles.

Buying without fail

A second thing I’ve been doing is continuing to buy shares in an exchange-traded fund (ETF) that forms the core of my ISA. In complete contrast to the stock-picking part of my portfolio, this happens every month without fail.

There are two reasons for this. First, owning this fund means that my money is instantly spread around more companies than anyone could ever realistically own directly. This ‘safety in numbers’ strategy should mean I don’t need to worry (too much) when the market hits a sticky patch.

Second, despite all the corrections and crashes we’ve witnessed over the years, the market hasn’t yet failed to recover. History can never be a perfect guide to the future, of course. But anyone betting against the resilience of the human race and its capacity to innovate hasn’t done well so far.

I’d still take the other side of that bet.

My favourite fund

The specific fund I own in my ISA is the SPDR MSCI World ETF (LSE: SWRD). As it sounds, this invests in a huge number of stocks from around the planet. Around 71%’s invested in the US, where the tech titans dominate.

Why this fund over alternatives? Well, one key reason is that the annual charge is just 0.12%. That’s very low. And as any experienced Fool will tell you, costs really matter when it comes to growing wealth over decades (which is how long I’m investing for).

This isn’t to say that the value of my holding won’t dip when we next think we’re going to hell in a handcart, possibly due to the consequences of Donald Trump’s tariff tantrum.

This particular ETF only invests in developed countries too. So I’d need to find another investment if I wanted exposure to (riskier) emerging economies.

Looking for bargains

A final thing I’m doing is preparing a wishlist of stocks to buy. For me, these will always be companies boasting solid fundamentals, market-leading positions and sound finances.

Understandably, businesses like this rarely go on sale. But a market crash may provide such an opportunity, especially when other investors are panicking and chucking innumerable babies out with the bath water.

The post How I’m positioning my Stocks and Shares ISA for the next market crash appeared first on The Motley Fool UK.

But I’m unshaken in my belief that share and fund investing is the best way for me to build a second income.

Even setting aside just £50 a week could deliver me a healthy extra income. Here’s how I’d look to achieve this.

Reduce costs

I think £50 is a decent amount to start out with. However, it isn’t the largest, either. And so I need to take care to maximise every ounce of profit to achieve a decent return.

So investing in a tax-efficient financial product is the first thing I need to do. In the UK, I can do this with an Individual Savings Account (ISA) — the two options available to me are the Stocks and Shares ISA and the Lifetime ISA.

Alternatively, I can use a Self-Invested Personal Pension (SIPP). With any of these products, I don’t have to pay a penny to the taxman on any capital gains or dividend income. I just need to make sure their restrictions don’t impact my personal goals.

SIPPs, for instance, don’t let me withdraw any cash until my late 50s.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Tax isn’t the only cost I’ll be looking to avoid. With my £50 investment, I’ll also be looking to reduce the costs of holding and building my portfolio of shares.

To this end, I’ll shop around to find the best broker that fits my needs with the lowest trading and management fees. The market is highly competitive and so I have a lot of choice here.

Furthermore, I’ll also try to minimise the number of trades I make. If I invest £50 each week and pay a £5 trading charge, I’ve ‘lost’ 10% straight off the bat.

A better strategy could be to save up and invest £217 a month, for which that £5 charge would be less destructive to my wealth.

A top ETF

I could also cut costs by investing in an exchange-traded fund (ETF). This would allow me to build a diversified portfolio without having paying a trading charge for lots of separate shares.

The SPDR MSCI World UCITS ETF (LSE:SWRD) is one ETF I’d consider buying. As the name suggests, it gives me exposure to many different regions, which in turn helps me manage risk.

In total, it holds shares in 1,400 separate companies. And with an ongoing charge of 0.12%, it’s also one of the most cost-effective global ETFs out there.

With a high weighting of tech stocks like Nvidia and Apple, it could help me capitalise on fast-growing phenomena like artificial intelligence (AI) and cybersecurity too. That’s even though its denomination in US dollars leaves me vulnerable to adverse exchange rate movements.

A £20k+ second income

The fund has delivered an average annual return of 13.2% over the past five years. If this continues, it would turn my £217 monthly investment into £505,580 after 25 years.

I could then draw down 4% of this amount each year for an annual passive income of £20,223.

Past performance is no guarantee of future returns. But funds like this could prove a great way to build a terrific passive income.

The post Here’s how I’d target a £20k+ passive income by investing just £50 per week! appeared first on The Motley Fool UK.