How Downton Abbey can turn your finances into a class act

Riddled with spoilers

Despite what you might think, Downton Abbey, that stately home fantasy where the divide between upstairs and downstairs is so flexible that a maid can help a lady dispose of the “handsome Turk” who died in her bed, has surprising and valuable lessons about finances.

The third film has just been confirmed, with many of the original cast, such as Hugh Bonneville and Michelle Dockery, returning and other well-known names joining. We can only hope that O’Brien, the lady’s maid with a face like a slapped derrière, will be back so she can delight us all with her evil machinations.

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Ahead of the release of the film, let’s examine what 21st-century savers and investors can glean from Julian Fellowes’ award-winning series about the lives of the aristocratic Crawley family and their servants.

A few lessons from Upstairs…

On the wrong track with shares

In case you don’t remember, Robert Crawley, Earl of Grantham, is the one whose stomach ulcer bursts with a volcanic ferocity, spraying blood over the dinner table. Lord Grantham loses most of his wife Cora’s fortune after investing it in a Canadian railroad stock, the Grand Trunk Railway. This was a real-life line, which went bankrupt in 1920 and was nationalised.

Lord Grantham comes a cropper on the Grand Trunk investment because of an obvious lack of diversification. He’s bet almost all Cora’s wealth on a single share and risks losing the home his family has lived in for generations. If only he had invested in a diversified investment trust such as Scottish Mortgage Ord (LSE:SMT) (established 1909), he might have fared better…

In today’s world, Lord Grantham’s tunnel vision is akin to someone investing a lot in, say, GameStop Corp Class A (NYSE:GME), or bitcoin play MicroStrategy Inc Class A (NASDAQ:MSTR). While that seems an unlikely move, people can easily end up over-exposed to one asset class, sector, theme or country.

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It’s important to examine a fund or investment trust’s factsheet to determine the top 10 holdings and make sure you aren’t overexposed to certain shares or sectors across your own portfolio, especially if you are unlikely to be bailed out like Lord Grantham, who is rescued from disaster by another person’s wealth.

It’s relatively easy to end up overweight on US tech, for example. This is partly because a handful of companies make up a large proportion (almost 30%) of America’s S&P 500 index. Investors with S&P tracker funds and other global investments with significant exposure to the US or tech, can quickly find themselves with too much tech.

My colleague Kyle Caldwell explains how you can reduce the risk of having “too many eggs in the technology basket” by tracking an equally weighted index rather than a market-weighted index.

Leaving family money to loved ones

The irony of Cousin Matthew, a solicitor, dying intestate does not go unremarked on in the series. Viewers hardly have time to recover from his death in a car accident before they must face the prospect of his late wife, Lady Mary Crawley, and newborn son, losing Downton Abbey (Matthew was the heir).

A letter written by Matthew naming Mary as his heir is conveniently discovered because this is cosy-as-a-warm-bath costume drama after all. However, while fears about Lady Mary losing her ancestral Yorkshire pile are quickly staunched, it serves as a stark reminder that dying intestate remains as stressful for loved ones today as it was then.

Dying without a will or failing to update one to reflect your current circumstances, can throw a huge spanner in the works when it comes to dividing your estate and pension(s) among surviving relations, particularly if there are multiple marriages and children.

The wishes in a will, however outdated, are binding. To illustrate my point, in Downton Abbey, Violet, the Dowager Countess of Grantham, who has the best lines in the series – “What’s a weekend?” –  inherits a villa in the South of France. Despite objections from the wife of the man who bequeathed Violet the property on the Riviera, the dowager countess is the one who ends up with it.

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Wills are related to inheritance tax planning, and while you may not be passing on a villa on the French Rivera, careful planning can mean children and grandchildren receive a financial fillip.

Sharing your wealth might even start now, through a little-known method that involves making regular gifts through excess income (if you are lucky enough to have it).

Taking a little time to familiarise yourself with rules around gifting money could help you divert more cash to your family, and away from the taxman. interactive investor’s personal finance editor Craig Rickman has written an excellent article on IHT tips.

Should I invest short-term savings?

So much of life is out of our control and unexpected expenditure is bound to happen.

While for the Crawley family, out-of-the-blue bills arise as a result of their mansion roof leaking and the king and queen paying them an unexpected visit, for you and I it may take the form of a hefty vet’s bill or a clapped-out washing machine. But the theory’s the same; having savings eases the pain, and it’s vital that this money is easily accessible when rainy days arrive.

Try to set aside three-to-six months’ salary if you can, and avoid investing this money, as you may be forced to withdraw it to cover emergencies when the market has tanked.

Investments should be reserved for long-term goals not only because you can benefit from compounding returns, but because if there’s a downturn, you will hopefully be in a position to allow the market to recover before needing to withdraw your funds.

Picture credit: from left to right, Lord Grantham (Hugh Bonneville), Elizabeth McGovern (Duchess of Grantham), Michelle Dockery (Lady Mary), Laura Carmichael (Lady Edith) and Allen Leech (Tom Branson) on the red carpet for the world premiere of the film Downton Abbey in London. Photo credit: TOLGA AKMEN/AFP via Getty Images.

And a few lessons from Downstairs…

You can be savvy and still get stung

Thomas Barrow,the footman who eventually emigrates to America with a suave actor, is arguably the second-best villain in the series.

Barrow’s shrewd, but even he’s taken in after buying substandard food for a black-market enterprise and losing all his money. Then there’s the card sharp, a well-spoken trickster who fleeces a few Downton inhabitants before his downfall, and the disfigured soldier, who temporarily convinces Lady Edith that he’s Patrick, the Crawleys’ lost heir.

You can be sharp as a tack (or not in Edith’s case), but none of us are immune to constantly evolving schemes to get our money. A relative recently received an email from a friend, who was on holiday at time, asking to send money to buy vouchers for someone’s birthday, for example.

Taking your time on decisions, refusing to be rushed when there’s a time-limited offer, and investing only with reputable companies can all help safeguard your money.

And if you get a lucky break?

Moseley, the footman turned schoolteacher, is offered a lucrative deal as a scriptwriter at the end of the second Downton film. He’s going to have money to spare! While he was clearly hiding his academic light under a bushel in the servants’ hall, does he have latent investment knowledge too?

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If you receive a windfall like Moseley or want to start investing but lack confidence, our Managed ISA could help you. By answering a series of questions about your financial goals and attitude to risk, we can direct you to one of 10 ready-made portfolios that’s a good fit for you, meaning you can save time for other things.

Like watching the third and final Downton Abbey film.