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Paxman posted:If I've understood, the consensus is that once you reach the stage where it makes sense to invest in a stocks and shares ISA, the way to go is passive tracker funds. By far the biggest predictor of how well a fund performs relative to its reference index is the fees charged. And not in a good way, as in, the more you are charged the worse it tends to do. There is very scant evidence of any skill or learning in stock picking regardless of how educated you are, and while there may be some skilled managers out there, they are not common, like at least less that 1%, if they even exist at all. Even some of the most famous investor’s gains, for example Warren Buffett, can largely be explained by a high exposure to an overall risk factor of the market, rather than some exceptional foresight. By picking an active manager, you are basically placing a bet that your guy is better than most every other active manager out there with little to no way to verify whether he’s actually skilled or just getting lucky. In short, it’s better to play dumb and pay little than to try to outsmart the market.
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Apr 1, 2021 07:53
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| # ¿ May 25, 2024 02:56 |
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Even putting it all into a UK gilt ETF will deliver much higher interest than a HISA, and it will be very safe by comparison to equities.
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Apr 8, 2021 16:41
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As an aside, investing in government bonds is analogous to investing in a gigantic savings account that is guaranteed directly by the U.K. government. I’m not 100% on how it works in the U.K., but deposits in a normal cash savings account are only insured up to a certain amount which is almost certainly less than seven figures, which means if your bank goes under then you will likely only get that insured amount back. This however is only a major concern if you have seven figures in cash, which is not unheard of for wealthy retirees, but it’s good to know about the limits of deposit insurance in any event.
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Apr 11, 2021 19:04
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Hammerite posted:Thank you for the advice, I will look into adding a lump sum to my workplace pension or opening a SIPP. I will think about a S&S ISA but like I said I'm fairly averse to risk. FWIW S&S ISA doesn't have to be risky and can be entirely self-directed, like the SIPP. Just don't load up on risky securities/funds in either account, a 3-fund portfolio (bonds, local equities, international equities) with 50/50 bond-equity split is common for lower-risk individuals who want to not think at all about their investments.
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May 17, 2021 21:35
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Apparently you can just set up a S&S ISA with vanguard directly and dump it all into one of their lifestrategy funds for 0.23% a year and then forget about it until the end of time. Unless anyone has issues with those funds for whatever reason, that's probably what I would do if I wanted to care less than not at all about the technicalities of investing.
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May 17, 2021 23:01
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When I saw "Premium Bond" I assumed we were talking about bonds that are trading above face value. Then I remembered that the UK has that whacky lottery bond, also called a premium bond, which is not the same thing at all.
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Oct 18, 2021 01:09
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Shelvocke posted:Have started contributing regularly to my Vanguard S&S ISA again. Anyone have thoughts on Lifestrategy Vs the S&P 500 ETF? Blend of the two? The S&P 500 is only exposed to the top 500 firms by market cap in the USA, meaning you have no global or small-medium cap diversification. By exposing yourself only to the USA, you are exposed primarily to the unique risks of the U.S. market that may not be present in other countries, such as regulation, taxes, inflation, monetary policy, etc. The Vanguard LifeStrategy funds are exposed to the total global stock market with some bond allocation, which in theory means your risk adjusted returns should be more consistent because your risks are more diversified. Basically, it’s better to be more diversified if you’re looking for consistent returns.
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Nov 8, 2021 18:19
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I believe some reasons people overweight their home country is 1. Favorable tax treatment on dividends, especially on government bonds. 2. Offsetting currency risks by owning more securities denominated in the currency that you are generally spending money in. Point 1. is frankly not something that someone except the more onerous penny pincher should be worried about. Point 2. is a real risk to be aware of but others may argue that exposure to other currencies is actually a good thing. It's a personal choice, I personally don't heavily overweight my own country because it's honestly not something I lose any sleep over it, I prefer to own everything in reasonable weights anyway.
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Nov 8, 2021 22:20
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Ten year runs are not abnormal, especially when the past ten years has primarily been a prolonged bull market. History is full of the corpses of fund managers that had those kind of runs that were then followed by years of abysmal performance before they eventually handed over control of the fund.
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Nov 9, 2021 02:59
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If you are an average investor and you're unsure of exactly where to put your money, your best option for investing is to pick a well diversified low-cost index fund, full stop. The average person has no idea how to pick individual stocks, and even less idea on how to pick a fund manager who isn't just getting lucky for extended periods of time. If you require financial advice then by all means see a fee-only advisor who can help, or even speak to a wealth management firm who can sit you down (not one of those bank mutual fund salespeople) and figure out exactly what your goals are pick a strategy that you can actually stick with long term. Going with a high percentage fee fund manager that has only dozens of holdings is absolutely not for the average person.
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Nov 9, 2021 03:13
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The original post was asking for advice between two Vanguard index funds, and a comparison with an active fund with no more than 30 holdings. It is worth pointing out that those options cannot be placed on the same table or even in the same room as each other. If the answer to the active fund is "unsure", then it's definitely not the option they're looking for.
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Nov 9, 2021 03:44
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I get that you want to talk about the quality of the fund and that's fine, but the post you responded to was in direct response to somebody asking for legitimate advice deciding between two Vanguard funds and a high fee active concentrated fund. It is 100% necessary to close that out before shooting the breeze or whatever and inadvertently recommending something which sounds like it is probably not a good fit for their savings.
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Nov 9, 2021 04:23
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Shelvocke posted:Thanks Goons. I guess the distinction is that the Vanguard funds represent "keep" money and the Fundsmith would be "gambling" (albeit good odds gambling). I'll probably pick a few ETFs with a global spread. So it's probably a little better than gambling, the people who make those decisions are still smart people and by the looks of it they are investing in decent companies. It's highly unlikely that fund goes to zero, but due to the concentrated nature of the fund, a single large drop in one of the holdings will significantly impact the portfolio. The dispersion of outcomes is going to be a lot higher; that is, you might get a 50% gain one year, or you might lose 50%. Over time you might see huge gains, but you might also not see anything, or worse be significantly down. This is as opposed to something more diversified like an S&P500 fund or even better, a global equity fund. Diversification eliminates the idiosyncratic risk of a small number of holdings taking your entire savings down, and the returns you're left with is the market average. In the absence of some some kind of special non-public information about the market, this is always going to be the best option for the retail investor who values both capital preservation and consistent growth.
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Nov 9, 2021 20:59
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Agreed. Although I’ve heard people arguing that a big tech company like Amazon or Microsoft is already diversified because of the sheer number of sectors it’s present in, and they are not completely wrong. Eitherway only owning US large cap is not generally seen as an efficient strategy, owning everything is really what diversification is all about.
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Nov 10, 2021 20:16
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Be careful opening and contributing to any accounts in the UK from abroad. You’re not a tax resident of the UK, so generally brokerages are hesitant to allow you to even open an account.
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Nov 12, 2021 18:58
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That isn't even S&P500, that fund contains 263 holdings, all are large cap growth stocks (the biggest of the biggest companies), 80% in the USA. I would personally stick with LifeStrategy because it's much more diversified. If you're looking to tweak the allocation of that portfolio, then a simple passive 3-fund portfolio (local equities, international equities, bonds/gilts) would suffice, rather than a single expensive undiversified fund.
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Dec 23, 2021 08:50
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Sell them and and buy an indexed ETF. There is no favourable tax treatment in the UK for holding a security long term. You are already risking your salary on the success of your company, don’t risk your life savings too.
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Jun 8, 2022 20:26
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Not in the UK but my experience with credit unions is they are good but make sure basic poo poo like security is in place. Often times I've seen their online banking and security is really not good compared to the big banks. Also lol at credit unions not funding some rich rear end in a top hat's mortgage. I guarantee you if a rich rear end in a top hat went to them for a mortgage, they would give it to them.
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Aug 18, 2022 18:18
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You didn’t know how bad it was going to get when you invested. You still don’t know. Literally 99% of people on the planet are down YoY, -5% is actually pretty decent in comparison to many. Eitherway, don’t cry over spilled milk, what’s done is done and the only thing that matters is what you do now, which ideally is nothing except keep on investing. I don’t know if the market is going to keep going down, but I do know that investors have historically been rewarded for taking on risk.
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Nov 4, 2022 06:35
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Clarence posted:Understood. All these things are cyclical and the historical trend is generally upwards over the long term. Understand you are still trying to time the market. If your strategy is anything but “do what I always do” then you are trying to time the market. If going through a bear market like this is proving too painful, then you should really be considering where you were taking on too much risk to begin with, and should switch to a strategy you can stick with until you can reach your investment horizon.
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Nov 4, 2022 17:12
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Clarence posted:The implication there is that, saving a regular amount with a fixed end date, go for S&S until 5 years before the date and at that point switch it to regular savings? You should evaluate your tolerance for risk on a higher cadence than 5 years. The implication is that you adjust your investments (sell off some shares and switch to bonds) as time goes by to account for your time horizon approaching. Once you reach your time horizon, your investments should almost entirely be in a fairly robust asset class like bonds or cash. 5 years is just a number where if you are invested in a riskier asset for the entire time, you probably will have at least the amount you put in, but it's not guaranteed and if you have only a year left of your horizon, you probably don't want all of it in stocks. qhat fucked around with this message at 22:04 on Nov 21, 2022 |
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Nov 21, 2022 22:00
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Not timing the market also applies to housing, unless the market is so ridiculously frenzied that you can only compete by putting in unconditional offers, in which case you should probably wait until it calms down so you can do your due diligence. Other than that, if you want to buy then you should pick a mortgage that fits your financial situation. If you can afford the swings of a variable rate, you should get that. If you can't, you should get a fixed rate. Yours or someone else's perception of where the market is going to go in a week, a month, a year from now should not affect whether you actually buy.
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Jan 5, 2023 22:12
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+1 for Vanguard too, don’t know what their app or website is like though, but it’s a solid company with low fees across the board.
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Jan 23, 2023 11:22
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I am 95% sure won’t be taxed on it because you earned it before moving and have already paid tax on it in another jurisdiction, to tax you again would be double taxation which most if not all western countries don’t do. Just make sure you have all your documentation, like bank statements, ready in the odd event that HMRC want to audit it. If in doubt, just ring HMRC up and ask, they will tell you.
qhat fucked around with this message at 16:18 on Aug 22, 2023 |
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Aug 22, 2023 16:15
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| # ¿ May 25, 2024 02:56 |
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There is no guarantee rates are going to fall.
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Feb 5, 2024 10:18
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