Meet Lel: The self-taught investor with a diversified portfolio

• Name: Lel Smits
• Job: Managing Director of The Stock Network 
• Years spent investing: 12 years 
• Biggest investment: 4DMedical (ASX: 4DX)
• Secret or not-so-secret talent: Jazz singing. It was my passion before journalism came calling
• Guilty reading or viewing pleasure: Finance YouTube videos - I love watching top creators communicate edutainment. Creators such as Erika Kullberg are leading the game, serving up short, snackable and actionable content.

1) Can you share how you started investing and what your first investment was?

My grandparents were all refugees and arrived in Australia with nothing but a suitcase. While I sadly didn't grow up with financial literacy, I fortunately was raised with a strong focus on education - "the one thing no one can take away from you". While studying for my Masters in Journalism at UTS, I surprisingly landed my first full-time role as a broadcast finance journalist and was forced to quickly self-learn.

On an entry journalist's wage, I saved up over months to buy $500 of BHP (at around $30 per share) and $500 of Lynas Corporation (at around $1 per share). Devastatingly, when I went to check up on my investments I learnt my small, or "unmarketable", parcel of Lynas shares that had fallen had been reclaimed (after which the shares rose considerably). Regrettably, with address changes in the period and no email notifications, I missed notifications but gained a big lesson - make sure to actively manage and monitor your investments.

While I'm now a Director of the Australian Shareholders' Association and part of the nation's largest shareholder group, I still acutely remember the challenges I faced as a new investor, and am driven to support independent education and advocacy to keep markets safe and accessible for all.

2) How would you describe your strategy and your investment goals?

Diversifying my investments to target steady returns is a core strategy in my investment approach. By spreading investments across various asset classes, sectors, and geographic regions, I'm focused on mitigating the risks associated with market volatility. 

As a former financial markets journalist, I would write up to 12 ASX-listed company stories a day and have reported from inside the ASX, NYSE, Nasdaq and LSE. Though I still find myself looking for 'the next trend', I choose to invest because I have long-term conviction.

This strategy aligns with my investment goals of preserving capital, achieving long-term financial stability, and generating a reliable income stream. I believe that a well-diversified portfolio not only reduces exposure to individual asset risks but also enhances the potential for steady returns by capitalising on different market opportunities.

3) Can you share your top 5 holdings in % terms and why you hold these positions?

I believe in the diversification of assets and personally hold property, cash, cryptocurrency, private, and public investments and invest in my own company. I would love to invest in more alternative assets in the future, such as art, but that's a long-term goal, as I've committed to only buying what I understand.

For now, when it comes to the stock market, I'm pleased with a diverse selection of stocks including:

1. 4DMedical (ASX: 4DX) - 23%

4DMedical is my largest single-stock market investment. I purchased the stock before I worked for the company for two years. We have a policy of not purchasing stock while working for a company. I was initially impressed by the company's proprietary world-first lung imaging technology meeting the global demand for digital health solutions. My conviction increased further after working for the company as an investor relations adviser for two years and witnessing first-hand the leadership, board, advisors, expertise, passion, dedication and technical excellence driving the company's US expansion plans.

2. Apple Inc (NASDAQ: AAPL) - 20%

I purchased the stock some time ago as it met a lot of my investment criteria. Specifically, my familiarity and long-term usage of the product gave me confidence in the company's commitment to innovation and R&D investment, supported by global reach, customer base and alignment with an increasingly tech-reliant future.

3. Xero Limited (ASX: XRO) - 20% 

For similar reasons to Apple, I was compelled to buy Xero because of its strong market position, customer loyalty, innovation and expansion upside. As a business owner, I've also witnessed first-hand how it has transformed our financial reporting and consistently hear only positive feedback from local accountants, making me positive about Xero's growth prospects.

4. Australian Ethical Investment Limited (ASX: AEF) - 20%

I've always believed in investing for good and that societal and financial prosperity can coexist. As a pioneer of ethical investing, I like that AEF goes beyond environmental, social and governance (ESG) and screens for both ethical and investment merits, in addition to donating 10% of profits (after tax and before bonus) each year through the Australian Ethical Foundation.

5. Commonwealth Bank (ASX: CBA) - 17%

As above, my familiarity with Commonwealth Bank services gave me confidence in the business, backed up by its dominant position, strong financial performance, stable dividend yield, and robust capital management. The bank's commitment to digital innovation and customer-centric services enhances its competitive edge and there's nothing better than being a happy customer and shareholder. 

4) What investment is on your watchlist? (i.e you don’t currently own it)

I have been watching imaging provider Pro Medicus Limited (ASX: PME) for a while, heard the founders' compelling presentation, read the upbeat commentary and am excited by the company's prospects. I can't, however, find the conviction to purchase at current levels, so have my hopes with fellow imaging provider 4DMedical (ASX: 4DX) for now. 

5) What has been your worst investment and what has been your best?

All my best investments were purchased in March 2020. Being a finance journalist gives you a nose for maximum fear on the streets and I took the opportunity to purchase blue-chip stocks I'd always wanted to own such as the then-oversold Commonwealth Bank (ASX: CBA).

6) Are there any lessons you’ve learnt during this journey that could help others?

• Record everything - You can’t manage what you can’t measure
• Invest in yourself - Your network supports your net worth
• Resist FOMO (Fear Of Missing Out) - Focus means saying no

And, keep your feelings in check. There is a big difference between a casino and an investment. Investing well means work and patience. It should feel boring at times, but deeply rewarding when done well.

7) Can you share a personal passion or ambition you have for the future?

I have a mission to make stock education accessible for everyday Australians. Having grown up with no knowledge of stocks, and a fear of finance, I want to help break these barriers for future generations. I'm working on an early introduction to investing for children, including stock certificate templates to help children visualise investments, and have several projects focused on adopting a fresh approach to financial and stock literacy.  

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