Professional investors are using sophisticated systems to manage the composition and risk of their portfolios in order to achieve better returns. If you are just an ordinary investor with limited funds, you neither have the expertise, the time, nor the money to set up such systems. Still you can improve your performance, by setting and following a few basic portfolio management guidelines. It certainly requires some work up front, but you will soon realize the positive effects of a more focused, structured and disciplined investment approach.
People and their circumstances are different. An investment approach that fits one person perfectly, might overburden or bore someone else. Therefore, it is important that you spend adequate time designing your own concept, before you buy a single stock or bond, or even purchase a house with a very high mortgage.
For the ordinary non-professional investor, we suggest the following ten guidelines as a starting point. It is up to you to make changes and amendments to ensure compatibility with your own personality, expertise and dedication. Just make sure that you have compiled sound guidelines for yourself and that you stick to them.
1. Set clear financial goals
To have clear goals is important for many aspects of life, including investing. Without goals you will certainly end up somewhere, but probably not where you want to be.
When setting your goals, it makes a difference, whether you are a single university graduate, a middle-aged employee with a family, or a retiree in your seventies. Your personal preferences are just as important. What is your target lifestyle and how much will it cost to maintain it? Are you willing to spend a lot of time managing investments? Do you need a larger amount of money to set up your own business in the future? Will you inherit assets and do you plan to bequeath money to your heirs? When are you planning to retire? Those are just a few basic questions, that you need to answer for yourself. We are sure you can find additional questions, that are relevant to your personal situation?
Be realistic about your goals as you can’t have everything. Your goals will most likely represent many compromises. In order to get one thing (e.g. a new house), you have to give up or reduce consumption of something else (e.g. forego leisure time or slash purchases of non-essential items). Even though goals change over time, it is important to always have a clear idea about what amount of money you want to have at various points in the future.
2. Appraise all your assets and liabilities
Most financial advisors just look at your ‘liquid’ assets such as cash and securities, as they offer the highest potential for fees and commissions. However, a balanced portfolio should also include other assets such as real estate, precious metals, or crypto currencies. Even pieces of art, vintage cars, and expensive whiskey or wine might make sense for those, who possess the respective expertise.
A portfolio does not only include assets but also liabilities. Mortgages, student loans, consumer loans, car leases and credit card debt are wide-spread and have a big impact on long-term portfolio performance.
Adequate portfolio management requires, that all assets and liabilities are included. This applies especially to real estate. Quite a few people who own a house, some stocks and bonds and a life insurance policy, are surprised to learn, that after deduction of their mortgage and some other debt, their net worth is very small or even negative.
3. Make your finances more transparent
Companies are required to carry out regular accounting and prepare a financial statement at the end of each business year, composed of a Profit and Loss Account (P&L), a Balance Sheet, and a Cash Flow Statement. For private investors it is equally advisable, to regularly monitor their finances and compile at least a simple financial overview at the end of each calendar year. Such an overview should consist of an income & expense summary as well as a list of assets & liabilities.
It goes without saying that the regular monitoring of your personal finances and the annual preparation of a financial overview causes some work. But the benefits outweigh the efforts. In discussions with clients and friends we are always shocked to hear, that many people have no clear understanding of how they spend their money, what their current net worth is, or how much profit each investment has generated over the years. In case you disagree, can you provide accurate and up-to-date information on all the three items mentioned above? If yes, great. If not, you belong to the large majority and have some serious homework to do. Without a clear understanding of your current financial situation, you are more prone to make the wrong investments.
4. Only invest in products that you fully understand
The basics of a stock or a bond are comparatively easy to understand. However, stocks of one company are not necessarily the same. There might be common stocks and preferred stocks as well as stocks of different share classes (e.g. Class A, Class B, etc.). If you are unfamiliar with it, you might erroneously buy the stock of a division and not the whole company, or you might not fully participate in future price appreciation, but hopefully get a fixed annual dividend.
There is an even larger variety of bonds. Apart from the main distinction between government bonds and corporate bonds, there are plain vanilla bonds, zero coupon bonds, floating rate bonds, perpetual bonds, convertible bonds, yankee bonds, samurai bonds and many other kinds of bonds. If you are confident, because you bought a ‘high-yield bond’, be aware that this is just a euphemism for a ‘junk bond’. For sure there is a higher yield, but there is also a genuine default risk. It is important to know, that nowadays even so-called ‘investment grade’ bonds are often ‘covenant-lite’ and offer very limited or no protection in case of the issuer’s default.
Apart from direct assets, you can also purchase derivatives. They are financial products that derive their value from the performance of an underlying asset (or a derivative, or a group of derivatives, or groups of derivatives of derivatives) and are often highly leveraged and severely exposed to counterparty risks. Famous investor Warren Buffett therefore called them “financial weapons of mass destruction”. Recently Collateralized Loan Obligations (CLO), securities that are backed by a pool of loans and sold to investors in various “tranches”, have been very popular. They are very reminiscent of Collateralized Debt Obligations (CDO), that were at the heart of the Great Financial Crisis (GFC) of 2007-09.
Private investors rarely have the time to read all the fine print and investigate further, in case they are unclear. They should therefore proceed as follows: i) If your financial consultant, your bank liaison officer, or the robo-advisor of your online brokerage, is unable to explain the proposed product in understandable words within one minute, excuse yourself and run as fast as you can (either literally or figuratively), ii) If the sales person or robot has provided an excellent explanation under i), but is unwilling or incapable of providing a detailed description of all the risks associated with the product, follow the advice under i).
5. Avoid excessive risk
Every normal investment involves risk, i.e. the possibility of a partial or full loss of the invested capital. But there are investment techniques that can generate even higher losses.
One such technique is leverage, i.e. the use of debt to provide funding for an investment. Let’s assume you have EUR 1,000 that you invest for one year with a return of 15%. At the end of the year you have generated a profit of EUR 150. If you borrow EUR 500 (0.5 times your capital) at 4% interest, your profit increases to EUR 205. And if you borrow EUR 5,000 (5 times your capital), you get a handsome profit of EUR 700 or 70% of the capital invested by you.
Unfortunately, leverage does not just boost profits, but also losses. If instead of a positive return of +15%, you achieve a negative return of -15%, a non-leveraged loss of EUR -150 is converted into a loss of EUR -1,100 with 5 times leverage. This is more than the original investment amount of EUR 1,000.
If you think that such high leverage is unrealistic, you underestimate the risk behavior of many players in the financial industry. Some big hedge funds, with assets under management in the tens of billions of USD, use a leverage of 5-7 or even more. In September 2019 some of them got close to blowing up and the U.S. Federal Reserve (Fed) had to bail them out by massively increasing its repo operations.
Ordinary people use leverage for the purchase of a house or apartment. This is justifiable as long as they have saved enough capital to avoid excessive borrowing. Otherwise they end up paying their home twice, as total interest expenses can easily reach the price of the house. Or they go ‘under water’, if the price of the property falls. Let’s assume you buy a house worth EUR 500,000 with a EUR 400,000 mortgage. If the price of the property drops for whatever reason by -25% to EUR 375,000, your equity goes from EUR 100,000 to EUR -25,000, as you still owe EUR 400,000 to the bank. It happened during the GFC, expect it to happen again.
Another technique used by many financial professionals to increase returns is short-selling. If they expect the price of a specific security to fall, they borrow that security, sell it on the market, and buy it back later to return it to the lender. In case that the price of the borrowed security drops almost to zero, the investor can make close to 100% profit before the cost of lending. However, in the event that the price goes up significantly, the investor stands to lose a lot of money, which can be several times the original price of the security.
Investors can also trade options or futures. When done properly, this can help to reduce risk. However, if mistakes are being made or if the market turns in a completely unexpected direction, such strategies can result in heavy losses. For people selling call options naked, i.e. without owning the underlying securities, the risk is almost unlimited.
The use of leverage, short-selling, options and futures should be reserved for the true professionals. And even they get burned on a regular basis. The average investor is better off accepting ‘normal’ profits, while avoiding huge losses.
Be aware, that a single large loss can have a devastating effect on long-term portfolio performance. Let’s consider a specific example. What annual return does a one-time investment generate, if you keep the money invested over 10 years and attain an annual return of 10%, expect for one year, when the return is negative at -50%. Is it 8% or 7%? No, it is a meager 1.7%, even if the -50% loss occurs in the first year and during each of the following years you achieve +10% return (it doesn’t matter in what year you suffer the -50% drop, the end result is always the same). Some advisors might claim an average return of +4%, which is the arithmetic average. But the only number that matters, is the Compound Annual Growth Rate (CAGR), which is just 1.7%.
Investors who suffer a loss of 50%, must achieve a profit of 100% just to break even. Therefore, it is important to avoid excessive risk. This does not mean, that you should shy away from any kind of risk. But only invest in line with your risk capacity and your risk tolerance.
Risk capacity refers to the maximum amount of risk, that a person is able to absorb. If you are about to retire, you can’t accept a 50% loss and even a 30% loss would be hard to swallow. On the other hand, if you just finished university and got your first high-paying job, absorbing a loss of 75% on an investment of a few thousand dollar is painful, but can easily be compensated over your working life. Just save more within the next few months. Such a heavy loss should also have the positive effect of teaching you a lesson in risk management, which might help you to avoid similar mistakes at a much later stage in your life, when large losses can’t be compensated anymore.
Risk tolerance refers to a person’s attitude towards risk, especially what degree of uncertainty an investor is psychologically able to handle. People react differently when being exposed to risk. Some thrive in the presence of high volatility and high leverage, while others can hardly sleep, if the value of their assets declines by a mere 5%, and end up in a mental hospital, if the price drops by another 10%.
It is very important that you are conscious of your own risk tolerance. In case you are a risk-prone person, you can invest a larger part of your money in volatile assets with a good risk-return profile. But this doesn’t mean, that you should be reckless. As shown above, it is important to avoid excessive risk.
In case you are a risk averse person, focus more on stable assets. This does not necessarily mean, that you can’t purchase assets with large ups and downs. But only spend as much money as you are prepared to lose and avoid checking the price too frequently. While return is important, it should not compromise your peace of mind.
6. Contain your emotions
There is a simple rule in investing, buy low and sell high. This is difficult for professional investors to achieve, for private individuals it is often the other way around. They tend to buy close to all time heights for ‘fear of missing out’ (FOMO), and sell when prices are close to their lows, as they can’t identify the bottom. It is an open secret in the financial industry, that ‘dead cat bounces’ at the top of a cycle are used by financial institutions and market insiders to offload completely overpriced securities to unsuspecting retail clients, and buy them back later at much lower prices.
Private investors are the easy victims of a whole industry of sell-side analysts, ghost writers, bloggers and journalists, who make a living by inducing you and others to make the wrong decisions. Therefore, don’t watch lengthy videos, where the “only I know where the market is heading” message is repeated over and over again, and don’t believe anyone, who claims to be generating “guaranteed” profits of at least 412%, 799% or even 1056%. Instead do your own research, look at long-term fundamentals and ignore the daily noise.
To avoid emotional trades, it is useful to develop and follow your own trading strategy. First set the maximum number of assets, that you can manage to hold simultaneously. Then identify suitable investments and determine the maximum portfolio share and the maximum purchase price for each asset. In addition, have a clear idea of when to add, adjust and exit a position. Finally, reduce trades to a low level, as each trade costs money and countless studies show, that less trading often results in better performance.
One way to rule out emotions, is to invest a fixed amount of money in the same security at regular time intervals (e.g. invest EUR 250 every month into a specific stock, fund or ETF). In this case you buy a larger number of units of the security when the price is low, and a lower number of units when the price is high. Through the cost average effect, you avoid losses that can result, if you invest all your money close to an all-time height. However, you also forgo higher profits that can occur, if you buy all units of the security close to the bottom. As timing the market is very difficult, most private investors are better off accepting lower profits while avoiding higher losses.
7. Pay attention to fees, commissions and taxes
Fees can substantially reduce investment returns. There are sales loads, purchase fees, management fees, account maintenance fees, custodian fees, exchange fees, redemption fees and a lot more. Many people are not aware of them, as they are often only disclosed in the fine print of contracts or general terms and conditions, and sometimes not even there. With some sales loads amounting to 5% and some annual management fees to 2%, the impact can obviously be massive.
Whereas fees are paid by the investor, commissions are paid by the providers of financial products to their sales agents. Nevertheless, their importance should not be underestimated. They induce bank employees and financial consultants to sell you underperforming products to increase their own income. Never trust advisors, who derive part or most of their income from commissions.
Taxes are not the same for all asset classes, even though this contravenes the concept of tax fairness. Not only tax rates can vary, but there might be special exemptions or allowance for some assets, that are not awarded to others. If you buy a specific asset in one country, you might have to pay VAT, while the purchase is VAT exempt in another country. If you sell an asset in another jurisdiction, you might have to pay capital gains tax there and again at home, if there is no double tax treaty between both countries.
Without going into the details, it is obvious from the above, that taxes can have a big impact on your investment result. That’s why many banks and financial advisors offer products, that provide (alleged or real) tax savings. Those tax savings usually only apply, if the investments generate a profit. More often than not, this is not the case, or the actual gain is negligible. Therefore, never invest in a financial product for tax savings alone. First look at its risk-return potential and if you are fine with that, take the tax saving as an additional benefit.
The importance of fees, commissions and taxes for long-term wealth building can’t be overstated. When researching for potential investments, it is advisable to allocate part of your time to understand the details, especially if you are close to taking a purchase decision.
8. Stay away from costly advice that does not generate value
Private investors usually have only limited time and also limited financial expertise. It therefore makes sense for them, to consider obtaining external advice.
If you have decided to invest by yourself, you can purchase one of the many newsletters, that are offered by bloggers and financial advisors. Prices start at about USD 500 for an annual subscription and can easily go up to USD 50,000 and more. Before committing to an expensive subscription, ask for a free copy to get a better understanding of the quality provided.
In any case caution should apply. While a few newsletters provide real value, many are just a waste of money or even a tool to support ‘pump and dump’ schemes. The latter are scams, boosting the price of a security through exaggerated or false statements, so that the initiator can offload or dump own shares at a high price, before it crashes down again.
Many people prefer not to invest themselves, but rather ask someone to propose or even take the relevant decisions. Bank managers are in general not a good choice, as they focus on products that are highly profitable for the bank, but most likely not for yourself. The same applies to robo-advisors and similar services, that many banks and brokerages offer. Run away from all kinds of wealth management advisors (with or without ‘certification’), who offer to consult you free of charge or for a negligible fee. They will only propose securities that pay high commissions and the resulting portfolio will be costly and most likely underperforming.
If you are really sure, that you need the service of a financial consultant and have sufficient funds to pay for it, look for a qualified advisor, who is fully aware of the current economic and financial risks, uses a value-oriented investment approach and maintains high ethical standards. Ensure that you pay an adequate fee, preferably a low fixed amount plus a variable bonus based on real performance in comparison to a benchmark, and not a percentage of assets under management. Make sure that the advisor hands over all commissions, that are paid by product providers. Before you sign up, ask about custody risk and read all the fine print.
Finding a good financial advisor is difficult and also provides no guarantee for success. Make sure that you discuss each investment proposal and challenge your advisor to give you all the pros and cons. The final decision should always rest with you. It is also important to evaluate the work of your advisor at least once a year, by comparing the performance of your portfolio with one or several benchmark indices. We know that this causes additional work, but it is your money that is invested.
9. Create a low-maintenance portfolio
Considering the importance of money and wealth in life, private investors should allocate a sufficient amount of time to manage their portfolios. Unfortunately, the reality looks different. Most ordinary investors have a demanding job, a time-consuming relationship or family, one or several hobbies, and many don’t like to do financial research and respective calculations. Consequently, they don’t spend enough time looking after their own finances. Most likely this applies to you as well (if not, just skip this section).
How often have we heard from people, that they wanted to buy or sell securities, but didn’t have access to their account, as they were on vacation or on a longer business trip. How often have we heard, that people stopped checking financial news, because they just didn’t have enough time, and consequently suffered heavy losses. Let’s be realistic, you are not a professional investor and can’t follow the market 24x7x52. That’s why it is important to create a portfolio that requires low maintenance.
Such an approach means investing in assets with medium to long-term growth potential, that you don’t have to follow every day and can keep for several years. For sure, you will forego potential profits, that day traders and momentum traders can generate. On the other hand, you will have peace of mind and can avoid the mistakes of people, who are caught by emotions and trade too often.
10. Diversify your assets
With the prevailing high economic and political uncertainty in most countries around the world, it is more important than ever, to build a diversified portfolio.
When financial advisors talk about diversification, they usually refer to asset diversification. Most recommend a portfolio allocation based on some investment formula, be it a simple 60/40 formula (60% stocks, 40% bonds), a 1/3 formula (1/3 each in stocks, bonds, and money market funds) or a more complex formula, that is based on some fancy, but undisclosed statistical model. They will then propose buying specific securities without providing detailed arguments to support their recommendations. In addition, many will suggest, that you keep all your assets with them, to “optimize the cost structure” and “make your life easier”. They call the resulting investment holding a “diversified” portfolio. Nothing could be further from the truth.
In our opinion, apart from asset diversification, there are three other forms of diversification that are equally important: Diversification away from fiat currencies, diversification among jurisdictions and diversification among custodians.
10.1. Asset diversification
A well-diversified portfolio is composed of various assets with low or even negative correlation. This means, that not all assets should go up or down at the same time. Instead some assets might go up, while some stagnate, and the rest go down. It is possible to avoid larger diversification by hedging the risk of each asset or asset group with options, futures or other financial instruments. But those are the tools of true professionals.
The average investor with limited knowledge of financial instruments, should aim to spread risk between various asset classes, and within each asset class among various individual titles. This means, don’t put all your money in either equities or real estate. Instead consider other asset classes as well. And if you are invested in equities, don’t put all your money into a single stock, but rather consider various stocks, preferably from different industries and with different risk profiles.
It makes sense to invest in various asset classes according to some pre-determined allocation. But this allocation needs to be reviewed regularly. Depending on circumstances, the share of one asset class might be increased or decreased and during some periods it might make no sense to invest in this specific asset class at all.
For instance, currently we are not investing any money in bonds, as the low or even negative return does not justify the comparatively high risk, and other asset classes offer a better risk/return profile. But this assessment might change in the future.
Diversification is good, but it has its limit, especially for private investors. To have your investments equally spread over 200 separate items is not advisable, as you won’t have the time to follow each one of them. Instead it makes more sense to have your funds invested in 10 – 20 separate items, that you can track on a regular basis.
10.2 Diversification away from fiat currencies
The USD, EUR, GBP, CAD, AUD and other existing national currencies are not backed by any physical commodity. Instead they are so-called “fiat” money issued by the country’s central bank and only backed by … well … trust. This trust is eroding, as authorities have made it clear, that they embrace inflation. Originally their target was 2%, but recent statements by central banks indicate, that they are willing to accept higher inflation. Unrestrained money printing, disguised as “Quantitative Easing”, as well as ultra-low or even negative interest rate policies, also don’t help to increase trust in fiat currencies.
With the current monetary policies it is very likely, that people will eventually lose trust in their fiat currency, and as a consequence inflation will soar and perhaps even reach hyperinflation territory. History has taught us that fiat currencies eventually fail, sometimes in a spectacular fashion. We have seen it in in the 1920s in Germany and most recently in Zimbabwe and Venezuela. Expect it to happen again closer to home within your lifetime.
The people most affected by high inflation are holders of cash, savings accounts and bonds. As these assets are denominated in fiat currency, their value will decline in line with an increase in inflation. Holders of life insurance policies will also suffer, as inflation adjusted capital returns will be insufficient.
Even the holders of stocks might be impaired by a collapse of the fiat monetary system. Ultra-low interest rates coupled with excessive money printing over the past decade, have boosted most stock prices considerably above their fair value. Once Western fiat currencies fail, stock prices are likely to go down at least in real (= inflation adjusted) terms and dividends will be reduced or suspended.
A portfolio invested 25% each in stocks, bonds, life insurance policies, and cash is not really diversified. 75% of the portfolio is fully dependent on the value of fiat currencies and 25% at least to some extent. If fiat currencies fail, the portfolio will fail too.
In normal times, fiat currency risk is not an issue. But we are not living in normal times. As combined private and public debt currently stands at over 300% of world GDP, governments and central banks have only one realistic choice, inflate debt away.
A truly diversified portfolio must include assets with low or no correlation with fiat currencies. And the main candidates for this are (physical) gold and silver as well as cryptocurrencies such as Bitcoin.
10.3 International diversification
Most people have all their assets in their home country. Their house is located there, they have opened accounts with the bank around the corner and a domestic internet bank, they regularly pay premiums for a life insurance policy held with a domestic insurance company, and they invest their remaining funds with a local brokerage. Towards friends they claim to be internationally diversified as they have bought a global equity ETF, an emerging market infrastructure fund as well as USD, EUR and JPG bonds. But in fact, they keep 100% of their assets in their home country and therefore are 100% subject to the respective regulations and taxes as well as to local economic, political and social upheaval. We call this jurisdiction risk.
Being fully exposed to a single jurisdiction can have devastating consequences. Most Western governments are heavily indebted, and the debt pile is growing. It is just a matter of time, until governments start raising taxes, especially on real estate, that by definition can’t run away. But they won’t stop there. By promoting zero or negative interest rates, governments have already stolen billions from savers. They will have no scruple to expropriate additional assets, either covertly or openly.
If you still have enough funds, don’t count on being able to spend them freely. To prevent bank runs and capital flight, governments have started to restrict the free use of money. Larger cash deposits or withdrawals usually require a lot of paperwork or are even illegal. More restrictions are being prepared. Greece, a member of the EU and the Eurozone, has shown the way. To deal with the economic crisis of 2015, the Greek government decided to limit weekly ATM cash withdrawals to 420 EUR, severely restrict credit card use abroad and enact other capital controls. It can happen tomorrow in our home country.
The crisis will not equally affect countries, and governments will react differently to the challenge. If you live in an allegedly stable jurisdiction in Europe or North America, you might find out very soon, that your economic freedom is being suppressed and your personal wealth is taken away from you. Holding some of your assets in other jurisdictions with a strong track record in protecting private property, will help you to preserve your wealth. Storing assets away from home might also facilitate a move abroad, if the situation in your home country becomes intolerable.
10.4 Diversification among custodians
Banks and financial advisors urge you, to invest all of your money with them, to “save fees” and “get a better service”. That might or might not be the case, but we prefer to keep our assets with various custodians to reduce counterparty risk.
Many people still think, that banks are safe and that in the worst case, they can rely on a government-backed deposit protection scheme. This is wishful thinking, especially in Europe where many banks are already on the brink of insolvency. With so-called “bail-ins”, which are statutory in the U.S. and Europe, insolvent banks can use the money of unsecured creditors (such as savers) to restructure their capital to stay afloat.
If you think this won’t happen in the Western World, just look at Cyprus, a member of the EU and the Eurozone. As part of a 10 billion bailout by the European Central Bank (ECB) and the International Monetary Fund (IMF), Cyprus agreed in 2013 to accept a bail-in at two of its insolvent banks, resulting in substantial losses for deposits above 100,000 EUR. If the current crisis deepens, such ‘haircuts’ will start at much lower levels and government deposit insurance schemes will not have enough money, to comply with their guarantee commitments.
Insurance companies, brokerage firms and financial advisors are also not immune to bankruptcy. The longer the current crisis lasts and the deeper it gets, the more custodians are at risk of suspending service for several weeks or going out of business altogether. Eventually you will most likely get back some or all of your money, but this might take months or even years. In the meantime, you will have to live without it, which might prove disastrous, if you lose your job or need funds for other purposes.
At a time of declining business ethics and loose oversight, there is growing custody risk due to fraud. Perhaps you remember the case of Bernard L. Madoff Investment Securities LLC, that ran a Ponzi scheme costing its 4,800 clients almost USD 65 billion. There are plenty of similar examples all over the world. Once the current crisis progresses, more cases of deception and gross negligence will be exposed. Be aware that despite monthly account statements issued by your bank or financial advisor, you can’t be 100% sure, that the securities listed there were really bought for you, or that they haven’t been sold or “lent” in the meantime.
Considering the high risk of keeping all of your assets with one custodian, it is always recommendable to diversify among several custodians. This applies even more in the current crisis. Using at least two banks and two brokerage firms will certainly increase fees and personal workload, but this is more than offset by the reduced risk. The same applies for other custodians. To store all your gold and silver in just one vault, or all your Bitcoin in a single wallet, might have disastrous consequences. Make sure that not all custodians are based in the same jurisdiction, as explained above.
Whether you like it or not, money is very important in the world in which we live in. It enables you not only to buy beautiful things, but can also be a life savior if you get sick or need to escape your home country due to war, environmental destruction or political chaos. Therefore, it is essential that you spend more time looking after your assets. Don’t claim that working on your career generates more value. Even though it is certainly important, please consider the following wisdom: ‘It is more valuable to think one hour about money, than to work one hour for it’