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  • FIRST POST
    • sofa_searcher
    • By sofa_searcher 26th Aug 17, 1:15 AM
    • 17Posts
    • 2Thanks
    sofa_searcher
    Novice Investor seeking advice
    • #1
    • 26th Aug 17, 1:15 AM
    Novice Investor seeking advice 26th Aug 17 at 1:15 AM
    Hi all, I would highly appreciate some feedback on my plans for investing as a beginner.

    For some perspective, currently 24, no debts, pay into company pension plan. The plan is to drip feed £120 a month into 2/3 ETFs and 1 Fund (also plan to use peer to peer lending). The ETF’s and fund under consideration include
    • iShares Core FTSE 100 UCITS ETF (UK exposure/growth) – Logical investment as a UK resident. My worry is the impact of Brexit.
    • Vanguard All-World High Dividend Yield ETF or SPDR S&P Global Dividend Aristocrats UCITS (World exposure/fixed income) – Chosen as a source of income and for diversification based on location.
    • Vanguard Lifestrategy 80 (Mixed assets) – A popular and large fund with diy investors. Picked 80% equity as I am young and can take on the risk.

    Is this a good mix for a novice investor? Other being considered
    • iShares Global Water UCITS ETF – It’s an essential commodity which I believe is relatively safe as holdings consist of large utility companies.
    • iShares S&P 500 Health Care Sector UCITS ETF – Likewise, an essential industry and large pharma are considered safe but ‘boring’.
    • An emerging market ETF but I think is out of my depth so I’ll leave that for later.

    In terms of platform I considered
    3 etf / 1 fund (@ £30 each) – POTA
    2 etf / 1 fund (@40 each) – POTB

    TL;DR
    My first choice is Fidelity but could someone explain the extra “Our Service Fee" charge as explained below? Otherwise I like the look of TD Direct even though they are slightly more expensive than Fidelity.


    Platforms fees considered over 1 and 5 year in ();
    1.Fidelity – POTA: £45.09 (£225.45) / POTB: £45.08 (£225.40)
    Platform fee for total investment < £7499.99 is £45. No dealing costs for funds and 0.1% for all other investments, making this platform very cheap. Although I checked the cost for buying Ishares FTSE 100 ETF and there’s an additional “Our Service Fee" taking the total cost to 0.43%, is this unique to Fidelity?

    2.TD Direct – POTA: £54 (£270) / POTB: £36 (£180)
    Slightly more expensive than Fidelity but better variety of investment options. Platform fee is waived with active regular investing. Regular investment in funds are free so charges come from buying ETFs i.e POTA: 3x12x£1.50=£54 POTB: 3x12x£1.50=£36.

    3.Hargreaves Landsdown – POTA: £60.48 (£367.2) / POTB: £42.48 (£277.2)
    Relatively expensive but good platform and customer service based on reviews. Platform fees come to £6.48 per annum (0.45%x£1440) for both POTA/B and dealing comes to £54 and £36 respectively.

    4.Selftrade – POTA: £58.32 (£334.8) / POTB: £42.48 (£244.8)
    Lower #3 solely due to Hargreaves's reputation. Can anyone speak of their experience with selftrade? Platform fees is 0.30% for both POTA/B and dealing comes to £54 and £36 respectively.

    (Others initially considered: The Share Centre – POTA: £58.32 (£334.8) / POTB: £42.48 (£244.8), AJBell/Youinvest – POTA: £78.48 / POTB: £60.48, Charles Stanley Direct – Do not offer a monthly investment and III - Just expensive)

    Thanks in advance for the feedback
Page 2
    • Bravepants
    • By Bravepants 31st Aug 17, 12:55 PM
    • 272 Posts
    • 316 Thanks
    Bravepants
    The aim of including bond funds in a portfolio is to act as a damper in times of equity volatility. The VLS funds are re-balanced every year automatically. If equities fall, bonds tend to fall less, this changes the balance of your portfolio...greater bond value than equity value, so the re-balancing will sell some of the bond fund to buy the cheaper equities. Bonus!


    On the other hand if equities go up, increasing the proportion compared to bonds, some equities are sold to then stash them "safely" in the bond damper.


    In another thread someone posted a link to a US article about the 4% rule. it is interesting reading.


    It is shown there that even after lifetime of investing in a 60/40 equity/bond split (e.g. VLS60), the 4% safe withdrawal rule will still hold true. That is there is enough growth potential in such an equity/bind mix that a pot drawn at 4% per year should last a 30 year retirement.
    • bigadaj
    • By bigadaj 31st Aug 17, 6:31 PM
    • 10,655 Posts
    • 6,959 Thanks
    bigadaj
    Though of course none of the research has any experience of long periods of near zero interest rates, quantitative easing etc and certainly not the unwinding of said conditions.
    • Bravepants
    • By Bravepants 1st Sep 17, 9:07 AM
    • 272 Posts
    • 316 Thanks
    Bravepants
    Indeed, those could be interesting times. Hence perhaps people should stop transferring their DB schemes to their SIPPs!
    • Malthusian
    • By Malthusian 1st Sep 17, 9:15 AM
    • 3,280 Posts
    • 4,980 Thanks
    Malthusian
    Indeed, those could be interesting times. Hence perhaps people should stop transferring their DB schemes to their SIPPs!
    Originally posted by Bravepants
    Well, they're not offering them those all-time high CETVs because DB trustees have been overcome by the spirit of generosity.
    • sofa_searcher
    • By sofa_searcher 8th Sep 17, 9:26 PM
    • 17 Posts
    • 2 Thanks
    sofa_searcher
    I've been reading a few articles and one of the worries people are citing is EU growth only being propped up by ECB's QE. The question is what happens when it stops or will it ever stop? The UK is also in the same position but I don't believe the level of QE is of the same scale as that of EU.

    Any thoughts on this?
    • bostonerimus
    • By bostonerimus 8th Sep 17, 9:38 PM
    • 1,106 Posts
    • 620 Thanks
    bostonerimus
    I've been reading a few articles and one of the worries people are citing is EU growth only being propped up by ECB's QE. The question is what happens when it stops or will it ever stop? The UK is also in the same position but I don't believe the level of QE is of the same scale as that of EU.

    Any thoughts on this?
    Originally posted by sofa_searcher
    Stop reading articles. Stick to your VLS100 choice for a few years and see how things go. If you lose 20% "DON'T PANIC", you are young and have plenty of time to recover. As you get a bit older think about adding some fixed income
    Misanthrope in search of similar for mutual loathing
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