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    • Not Me Officer
    • By Not Me Officer 3rd Sep 17, 10:21 PM
    • 280Posts
    • 49Thanks
    Not Me Officer
    Diversifying portfolio & gaining knowledge - advice for a beginner?
    • #1
    • 3rd Sep 17, 10:21 PM
    Diversifying portfolio & gaining knowledge - advice for a beginner? 3rd Sep 17 at 10:21 PM
    To kick start me off i was recommended a book by John Edwards called DIY Simple Investing. I thought it was a great book because of the way it simplified things. It didn't baffle the newcomer with look how many fancy words i can use type jargon. It kept things nice & simple, easy to understand & from that i had the confidence to at the very least have a go myself (as opposed to paying an IFA which is what i was going to do immediately before the book - who i found was going to use St James' Place which i've read not so great things about).

    From that i decided that i wanted to begin with a fund that didn't need a lot of maintenance & was already reasonably diversified. I read a bit about index trackers & story a little short i decided i was going to go with the Vanguard LifeStrategy range. As at 34 i have 30-35 years left in me (hopefully not the latter) i ended up going with the VLS100 to get me going. Only time will tell whether i really do have the stomach for the ride but i'm confident i will.



    So the idea while that is in motion is to keep learning. Keep trying to understand because i'm very much a beginner.

    I know what i want - i want a well diversified portfolio. VLS100 doesn't cover everything so i've read but at the same time i'm not totally sure what it's weak or non existent in.
    Then i'd have to decide whether all additional funds remain as trackers or whether i have anything 'managed' (even though everything i've read seems to say that trackers consistently outperform managed funds over the long haul).
    And once that is decided on i'd need to decide on a ratio. How much weight/money do i put in one fund, and another and another & so on.



    So the last time i asked for this kind of advice the feedback was good. So once again can anyone recommend a good book to read that deals with that side of investing? Or can anyone just post up how they came to be comfortable dealing with the steps after just starting up? Basically i'd just like to kick on from here but at the moment i don't have the knowledge to do that.
Page 3
    • Ed_Zep
    • By Ed_Zep 6th Sep 17, 1:52 PM
    • 331 Posts
    • 259 Thanks
    Ed_Zep
    You're right. It was a hastily edited reply which I will re-edit but my point about indexing is valid.
    • bostonerimus
    • By bostonerimus 6th Sep 17, 5:32 PM
    • 1,133 Posts
    • 644 Thanks
    bostonerimus
    Anecdotally then diy investors are far higher up the risk scale than those using advisers. There no doubt various reasons for that, from being straight gung Ho, to potentially better knowledge (not necessarily true) to different age profiles or expectations.
    Originally posted by bigadaj
    People with the desire to DIY and get away form the hand holding of an adviser are probably comfortable with more risk......are at least and better at assessing their own capacity for it.
    Misanthrope in search of similar for mutual loathing
    • JustAnotherSaver
    • By JustAnotherSaver 6th Sep 17, 8:46 PM
    • 2,564 Posts
    • 410 Thanks
    JustAnotherSaver
    People with the desire to DIY and get away form the hand holding of an adviser are probably comfortable with more risk......are at least and better at assessing their own capacity for it.
    Originally posted by bostonerimus
    I can only speak for myself but the reason i went DIY is every man & his dog on the forum saying no need to go the IFA route, especially for such small amounts (i had 7.5k in an ISA at the time & i'd be contributing around £200pm).

    The IFA i got in touch with uses St James' Place but they have a £10k opener minimum which bought me time to come here & ask about it only to be told the charges are very high.

    I'd basically be throwing away money.

    That was the feedback that seemed to come about the IFA (who when checking their website afterwards the guy seems to no longer have the I in his IFA...). All the while i kept having the background hum of DIY, it's not hard, DIY it's not worth going IFA, DIY, DIY, DIY.

    So i decided to read some more about it & whether my confidence was false or not i felt comfortable going with the VLS range at least myself. The only decision was which number.

    Am i good at assessing my own capacity? Probably not, but i made a decision & every decision has outcomes. I'll find out what that is.

    • bigadaj
    • By bigadaj 6th Sep 17, 8:50 PM
    • 10,736 Posts
    • 7,022 Thanks
    bigadaj
    People with the desire to DIY and get away form the hand holding of an adviser are probably comfortable with more risk......are at least and better at assessing their own capacity for it.
    Originally posted by bostonerimus
    There's no evidence for that though.
    • AlanP
    • By AlanP 6th Sep 17, 9:27 PM
    • 967 Posts
    • 684 Thanks
    AlanP
    I can only speak for myself but the reason i went DIY is every man & his dog on the forum saying no need to go the IFA route, especially for such small amounts (i had 7.5k in an ISA at the time & i'd be contributing around £200pm).
    Originally posted by JustAnotherSaver
    That is a bit like going to a car maintenance forum and not seeing many "go to a garage" comments though isn't it?

    People not interested in the subject probably won't DIY, those that are will do the research (like you did) and a high proportion of those will feel confident enough to DIY.
    • AlanP
    • By AlanP 6th Sep 17, 9:29 PM
    • 967 Posts
    • 684 Thanks
    AlanP
    People with the desire to DIY and get away form the hand holding of an adviser are probably comfortable with more risk......are at least and better at assessing their own capacity for it.
    Originally posted by bostonerimus
    Does that apply to those who DIY, and as a result put all their money into a cash ISA or bank account because anything else is "too complicated and far too risky" ?
    • bostonerimus
    • By bostonerimus 6th Sep 17, 9:45 PM
    • 1,133 Posts
    • 644 Thanks
    bostonerimus
    Does that apply to those who DIY, and as a result put all their money into a cash ISA or bank account because anything else is "too complicated and far too risky" ?
    Originally posted by AlanP
    I hope nobody is going to suggest an IFA if all you are doing is bank accounts and cash ISAs. By default most people will have a bank account or a savings account, but it's when they start thinking about pensions and stocks and shares ISAs that the DIY or IFA decision has to be made. With a little reading, and the ability to ignore a lot of the superfluous information and advice that is given, most people can apply the simple rules of low cost tracker investing and will probably do just fine. This is not rocket science......as someone who worked for NASA I know that for sure.
    Misanthrope in search of similar for mutual loathing
    • JustAnotherSaver
    • By JustAnotherSaver 6th Sep 17, 11:09 PM
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    JustAnotherSaver
    While I get your point I wouldn't have said the mechanics & car forum was the best way to express it.

    I've been an active member on a number of car forums & when something has been beyond me the more helpful forums have always suggested to just get a mechanic to do it if I can't get hold of someone who can help out.

    Bringing it back - I think if someone clearly doesn't know and isn't that interested then i'd like to think the members here would not give bad advice and would actually say seek advice.

    I only had one of those - I didn't know but I was interested.

    • AlanP
    • By AlanP 7th Sep 17, 1:00 PM
    • 967 Posts
    • 684 Thanks
    AlanP
    I hope nobody is going to suggest an IFA if all you are doing is bank accounts and cash ISAs. By default most people will have a bank account or a savings account, but it's when they start thinking about pensions and stocks and shares ISAs that the DIY or IFA decision has to be made. With a little reading, and the ability to ignore a lot of the superfluous information and advice that is given, most people can apply the simple rules of low cost tracker investing and will probably do just fine. This is not rocket science......as someone who worked for NASA I know that for sure.
    Originally posted by bostonerimus

    No, what I am saying is in response to DIY investors understanding risk and their capacity for it. Cash = Safe, S&S = Risky.

    We get quite a few I have 6 figures in my Cash ISA because I don't trust S&S but want a better return.

    Whether it was conscious or not those people chose a DIY route, and despite what some on here say repeatedly, they are unlikely to go DIY into S&S.

    The whole area is worse than rocket science as far as a large proportion of the population are concerned. With rocket science not understanding it makes no material difference to them, optimising their investments (whether cash, pension or S&S ISA) does.

    You are comfortable going DIY, as am I and as are many on here, but it does not mean that everyone will be comfortable and should go DIY.

    The "comfort blanket" can be worth paying for sometimes despite the cost.
    • AlanP
    • By AlanP 7th Sep 17, 1:04 PM
    • 967 Posts
    • 684 Thanks
    AlanP
    While I get your point I wouldn't have said the mechanics & car forum was the best way to express it.

    I've been an active member on a number of car forums & when something has been beyond me the more helpful forums have always suggested to just get a mechanic to do it if I can't get hold of someone who can help out.

    Bringing it back - I think if someone clearly doesn't know and isn't that interested then i'd like to think the members here would not give bad advice and would actually say seek advice.

    I only had one of those - I didn't know but I was interested.
    Originally posted by JustAnotherSaver

    I couldn't think of a better analogy at the time, but as you say maybe not the best.

    If you read some of the threads there is "bad advice" on occasions, or at least opinions that may be influenced by the respondents attitudes, experiences and financial situation as opposed to the OPs.

    Fortunately there is normally follow up from other contributors pointing out the reason the "advice" might be wrong for the OP, or setting out the potential risk and exploring alternatives.
    • bostonerimus
    • By bostonerimus 7th Sep 17, 2:55 PM
    • 1,133 Posts
    • 644 Thanks
    bostonerimus
    No, what I am saying is in response to DIY investors understanding risk and their capacity for it. Cash = Safe, S&S = Risky.

    We get quite a few I have 6 figures in my Cash ISA because I don't trust S&S but want a better return.
    Originally posted by AlanP
    You've identified the big issue, which is lack of knowledge. With just a little education the vast majority of people could do what many financial advisers do. Unfortunately the UK has a long history of making investing more expensive and complicated than it needs to be which is probably why some people stick to cash......once people see behind the curtain they will realize that the "Great Oz" is mostly just a lot of smoke, noise and bluster. There will always be people that need or want professional help, but I think most people are perfectly capable of managing pensions and S&S ISAs if they can find the confidence to do it and access to some basic knowledge

    Of course the other reason people stick to cash is that they don't have a lot of money and can't afford to take the risk. The reduction in job benefits, stagnating wages and high cost of basic necessities like accommodation can make cash look attractive.
    Last edited by bostonerimus; 07-09-2017 at 3:07 PM.
    Misanthrope in search of similar for mutual loathing
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