Global Equities + Interest-Bearing Cash: our starting-point choice

1. What it is and how it works

The strategy holds just two instruments: Global Equities, via an ETF tracking the MSCI World global equity index (the 1,400 leading companies across 23 developed countries, regularly reviewed and automatically updated) — the engine that builds wealth over time; and Cash, an interest-bearing cash component held in an easy-access account or a money-market ETF — immediate stability and safety.

The Global Equities and Cash percentages adapt to your goals, time horizon and risk tolerance: the further away the goal, the higher the equity share can be; the closer you get — or the more regular withdrawals you expect — the more the Cash weighting grows. The journey below shows how this logic plays out, step by step, across four typical stages of an investor's life.

Your financial journey

The percentages shown are for reference, not a fixed rule: your ideal allocation also depends on your personal risk tolerance, not just your age.

Use the simulator to find the best Global Equities and Cash split for your portfolio.

2. Why this strategy — and not another one

There are many valid investment strategies. Our choice isn't the only right answer — it's the one we think is best suited to getting started: simple to understand, simple to apply, hard to get badly wrong. Here's why we didn't go with the most common alternatives.

MSCI World + Bonds (a 60/40 portfolio)

The classic 60% equities / 40% bonds portfolio is a serious, well-proven choice used by millions of investors worldwide. Bonds add a return source that's diversified relative to equities and can help reduce portfolio volatility. They do, however, require getting to grips with concepts like duration, interest-rate risk and the difference between government and corporate bonds — a non-trivial learning curve for a beginner. With MSCI World + Cash, you get a similar risk-reducing effect more directly: by simply increasing the Cash share.

MSCI ACWI (including emerging markets)

The ACWI (All Country World Index) includes both developed and emerging markets, offering broader geographic coverage than MSCI World. Many investors see it as a valid one-instrument global solution for that reason. Emerging markets can add diversification, but they also bring characteristics that differ from developed markets: higher volatility, greater geopolitical and currency risk, and return dynamics that can diverge significantly over time from those of mature economies. SimpleInvest uses MSCI World as its reference strategy because it already covers the vast majority of developed-market capitalisation and offers a structure that's simple to understand and follow. For anyone who wants broader global coverage, ACWI remains a perfectly legitimate alternative.

Multi-asset ETFs (e.g. Vanguard LifeStrategy)

Multi-asset ETFs combine equities and bonds into a single instrument, with automatic rebalancing. It's an elegant, low-maintenance solution favoured by many investors who prefer to delegate allocation decisions. The trade-off versus MSCI World + Cash is flexibility: you can't adjust the percentages to your own situation, nor use a separate Cash component as a liquid buffer. Anyone who chooses this route still ends up with a solid portfolio — the difference is mainly about how much control and customisation you get.

Actively managed funds (the ones sold by banks and advisers)

Actively managed funds sold through banks and financial advisers carry annual charges ranging from 1% to 2%+, versus 0.10 to 0.20% for a passive ETF. Over 20 to 30 years, that cost difference can add up to tens of thousands of pounds. And the majority of active funds — the data backs this up — fail to beat their index over the long run. This isn't a criticism of banks or advisers: it's simply what the data shows (source: SPIVA Reports, S&P Dow Jones Indices).

3. Who it's suited to

4. Starting capital — The engine that gets everything moving

Even a modest starting capital makes an enormous difference over the long run. There's no need to wait until you have "enough": the best time to start is as soon as possible. Thanks to compound growth, every pound invested today works for years — and goes on to generate returns of its own. Monthly contributions add up over time, but it's the starting capital that switches the engine on.

Anyone managing a large lump sum — following a property sale, an inheritance, or a windfall — faces a different challenge: investing it all at once carries the risk of entering at a market peak. Two cautious approaches: spread the purchases over 12 to 24 months with regular monthly buys, reducing timing risk; or start with a lower equity share (e.g. 40 to 50%) and increase it gradually over the following years, easing into your final target more calmly and with less exposure to initial risk.

5. Regular investing — Building up over time

The strategy adapts perfectly to the gradual accumulation phase: each month (or quarter), you buy a fixed amount of the World ETF, regardless of market price. This technique — regular investing, sometimes called pound-cost averaging — turns volatility to your advantage: you automatically buy more units when prices fall and fewer when they rise, which lowers your average purchase price over time.

You don't need a large starting capital: even £100 to £200 a month invested consistently over 20 to 30 years produces meaningful results thanks to compound interest. The simulator shows the impact of regular contributions on your portfolio under different historical scenarios.

6. Income and drawdown — Living off your portfolio

Once the goal is reached — retirement, financial independence, or simply extra income — the same strategy supports the gradual withdrawal phase. Rather than cashing everything out at once, you withdraw a portion of the portfolio periodically, leaving the rest invested. The Cash component acts as a buffer: you draw down the Cash first, letting equities keep working, and only rebalance when needed.

A well-established rule of thumb is a withdrawal rate of 3 to 4% a year of the total portfolio: at these levels, portfolios have historically held their real value over time, allowing withdrawals to continue indefinitely without depleting the capital. The simulator includes an income mode to test the sustainability of your withdrawal plan.

7. Rebalancing: when and how

This is the point that's both simple and strategic. Every 3 or 6 months, if equities have risen a lot, you sell some of them and bring the Cash back to its target level. If they've fallen, you buy more of the World ETF with the available Cash.

You set thresholds — ideally asymmetric — to decide the percentage below which you buy more Equities (typically target −5%, to lower your average purchase price) and the percentage above which you sell (typically target +10%, to take advantage of market rallies).

This simple discipline stops us acting on impulse. It forces us to "buy low and sell high," the one reliable rule for winning in markets over the long run. Use the simulator to check the impact of rebalancing on your portfolio.

When rebalancing signals an equity purchase — meaning the market has fallen below the target threshold — it's also the ideal moment to consider adding fresh capital, even partially. Investing during a downturn means buying at lower prices, amplifying the effect of the rebalance. It isn't an obligation, but an opportunity to seize when your personal circumstances allow it.

8. The Core of an Investment Portfolio

This strategy should make up the Core of your Investment Portfolio (70% to 95%). More advanced investors looking for extra dynamism might add a Satellite component, made up of individual shares or more sector-specific or niche instruments (5% to 30%).