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  • FIRST POST
    • balooney2000
    • By balooney2000 4th Jan 18, 4:23 PM
    • 49Posts
    • 3Thanks
    balooney2000
    Re-investing £2500 for a 24 year old
    • #1
    • 4th Jan 18, 4:23 PM
    Re-investing £2500 for a 24 year old 4th Jan 18 at 4:23 PM
    Hi,
    My son has an HL ISA account with approx £6000. However having sold an investment at the beginning of last year to realise the profit £2500 in cash. With the stock market so high he is now unsure which funds to reinvest in.

    Any advice would be appreciated he currently holds Woodford Income fund (not performing too well atm) and some Wimpey shares. This is a long term investment and he is prepared to take some risk.
    Thanks
Page 1
    • ValiantSon
    • By ValiantSon 4th Jan 18, 6:59 PM
    • 238 Posts
    • 225 Thanks
    ValiantSon
    • #2
    • 4th Jan 18, 6:59 PM
    • #2
    • 4th Jan 18, 6:59 PM
    Hi,
    My son has an HL ISA account with approx £6000. However having sold an investment at the beginning of last year to realise the profit £2500 in cash. With the stock market so high he is now unsure which funds to reinvest in.

    Any advice would be appreciated he currently holds Woodford Income fund (not performing too well atm) and some Wimpey shares. This is a long term investment and he is prepared to take some risk.
    Thanks
    Originally posted by balooney2000
    Personally, I would do the following:

    1. Stop investing in income funds for a start. He is 24 so really should be look at accumulating wealth rather than drawing income from investments (especially as he doesn't have a massive value in investments that are now helping him to retire early or only work part time). Switch to accumulation funds and, in my view, move to passive multi asset trackers.

    2. Move to a cheaper platform. Hargreaves Lansdown is expensive in his circumstances. They are good in particular situations, but in your son's position they are unnecessarily eating into his returns.

    3. Sell the Taylor Wimpey shares and reinvest the returns in a mulit asset tracker. Holding individual shares is not only risky it is super risky. There is little good reason to hold individual shares for the average individual investor.
    Last edited by ValiantSon; 04-01-2018 at 11:06 PM. Reason: Typo
    • sixpence.
    • By sixpence. 4th Jan 18, 7:16 PM
    • 59 Posts
    • 16 Thanks
    sixpence.
    • #3
    • 4th Jan 18, 7:16 PM
    • #3
    • 4th Jan 18, 7:16 PM
    If he is comfortable with a high level of risk I would invest a tracker that is 100% equity. Or atleast 80% such as the Vanguard Life strategy 80%.

    I am with Hargreaves myself. They are expensive but exceptionally well managed. I am 28 years old myself and started investing with them when I was about 22 or 24. I've benefited quite a lot from the hand holding they offer - if you are unsure of what something means you can give them a call etc. But then again I am adversed to moving or putting myself out so that might say more about me...
    • balooney2000
    • By balooney2000 4th Jan 18, 8:25 PM
    • 49 Posts
    • 3 Thanks
    balooney2000
    • #4
    • 4th Jan 18, 8:25 PM
    • #4
    • 4th Jan 18, 8:25 PM
    ValiantSon
    2. Move to a cheaper platform. Hargreaves Lansdown is expensive in his circumstances. They are good in particular situations, but in your son's position they are unnecessarily eating into his returns.

    Thanks for the above. Who would you recommend as an alternative to HL.... since this is the only one we are aware of?
    • ValiantSon
    • By ValiantSon 4th Jan 18, 8:36 PM
    • 238 Posts
    • 225 Thanks
    ValiantSon
    • #5
    • 4th Jan 18, 8:36 PM
    • #5
    • 4th Jan 18, 8:36 PM
    ValiantSon
    2. Move to a cheaper platform. Hargreaves Lansdown is expensive in his circumstances. They are good in particular situations, but in your son's position they are unnecessarily eating into his returns.

    Thanks for the above. Who would you recommend as an alternative to HL.... since this is the only one we are aware of?
    Originally posted by balooney2000
    It depends a little on which funds are being invested in and how often more money is invested (and existing investments sold - although I wouldn't be doing a lot of that as it is better to buy and hold in general). On such a small investment sum I'd suggest looking at a percentage broker rather than fixed fee. Have a look at the comparison table on Monevator http://monevator.com/compare-uk-cheapest-online-brokers/.

    If he does get rid of the Taylor Wimpey shares - and I cannot stress how strongly he should - and chooses to invest in Vanguard funds only, then using their own platform will be the cheapest option compared to anyone else. He'd pay 0.15% platform fee and the OCF for the fund, e.g. 0.22% on a LifeStartegy fund. So in total that would be a 0.37% fee.

    If you want to let us know some specifics about how much to invest each month/year and how often he will invest then I, and I'm sure others, may be able to make some more precise suggestions.
    • xylophone
    • By xylophone 4th Jan 18, 10:29 PM
    • 24,061 Posts
    • 14,069 Thanks
    xylophone
    • #6
    • 4th Jan 18, 10:29 PM
    • #6
    • 4th Jan 18, 10:29 PM
    He might want to sell existing investments and transfer the ISA to Vanguard?

    https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa
    • ValiantSon
    • By ValiantSon 4th Jan 18, 10:56 PM
    • 238 Posts
    • 225 Thanks
    ValiantSon
    • #7
    • 4th Jan 18, 10:56 PM
    • #7
    • 4th Jan 18, 10:56 PM
    He might want to sell existing investments and transfer the ISA to Vanguard?

    https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa
    Originally posted by xylophone
    If he does that then I would suggest selling his investments through Hargreaves Lansdown and then buying the Vanguard funds through them too. It won't cost him anything to do this. When he has done that he can open an ISA with Vanguard and transfer his ISA from Hargeaves Lansdown to them. There is a simple function to do this on Vanguard's site once you've signed up. Doing it this way protects the money in the ISA wrapper.
    • IanSt
    • By IanSt 5th Jan 18, 10:56 AM
    • 210 Posts
    • 162 Thanks
    IanSt
    • #8
    • 5th Jan 18, 10:56 AM
    • #8
    • 5th Jan 18, 10:56 AM
    Hi,
    My son has an HL ISA account with approx £6000. However having sold an investment at the beginning of last year to realise the profit £2500 in cash. With the stock market so high he is now unsure which funds to reinvest in.

    Any advice would be appreciated he currently holds Woodford Income fund (not performing too well atm) and some Wimpey shares. This is a long term investment and he is prepared to take some risk.
    Thanks
    Originally posted by balooney2000
    Hopefully the 'last' was a typo and you meant to say that the investment was sold at the beginning of this year?

    But regardless of that, if it were me then I'd put the £2500 into a globally diverse 100% equity tracker fund and transfer the others into that as well. Then just leave it alone through the ups and downs of the markets.

    Then I'd start reading up on investing and look into where my pension was being invested and whether I was saving/investing enough in the pension and elsewhere for whatever my life goals were.
    • balooney2000
    • By balooney2000 6th Jan 18, 3:12 PM
    • 49 Posts
    • 3 Thanks
    balooney2000
    • #9
    • 6th Jan 18, 3:12 PM
    • #9
    • 6th Jan 18, 3:12 PM
    Further to the valuable points made by others above. The Clive Woodford income fund is an accumulation fund.

    With regard to the information provided a number or respondents have suggested Vanguard life strategy funds. What makes this a better choice than any of the HL managed funds offerings? As I understand Vanguard has a heavy bias to US equities - what's wrong with UK or European equities?

    Thanks
    • ValiantSon
    • By ValiantSon 6th Jan 18, 5:17 PM
    • 238 Posts
    • 225 Thanks
    ValiantSon
    With regard to the information provided a number or respondents have suggested Vanguard life strategy funds. What makes this a better choice than any of the HL managed funds offerings? As I understand Vanguard has a heavy bias to US equities - what's wrong with UK or European equities?
    Originally posted by balooney2000
    Nothing per se, but I'm not sure why you would want to avoid the world's largest market. The aim is global diversification as well as asset diversification. Vanguard LifeStrategy offers wide global and asset diversification, but it is not the only option that does this.

    Actively managed funds are more expensive. Every pound you pay in management fees is a pound taken out of your returns (which is a pound that would be compounding over time). Active funds, therefore, have to perform even better for you to realise a greater gain. There is an ongoing debate between active and passive funds. In some situations you could hit on a fund that outperforms the market to an extent that it was worth paying the higher fees, but it is extremely unlikely to do that consistently. It is, therefore, more necessary to switch between funds (increasing costs due to trading). It is also impossible to know for certain that an active fund will outperform the market. Your research might suggest that it seems a good bet, but it might as easily turn out not to be. With a passive fund it just tracks the market so, over time, given that the market has a general upwards trend, you should see your assets grow.

    You will find some people who have done extremely well out of active funds, but you will find many others who haven't and would have been better off with passive trackers. Ultimately it is a choice to which there is no correct answer. Some of us prefer to use passive funds because we are satisfied with average returns for lower costs.
    • Eco Miser
    • By Eco Miser 6th Jan 18, 5:35 PM
    • 3,324 Posts
    • 3,089 Thanks
    Eco Miser
    As I understand Vanguard has a heavy bias to US equities - what's wrong with UK or European equities?
    Originally posted by balooney2000
    The VLS funds are actually biased to the UK, compared with the proportion of the world market represented by UK shares.
    About half the world's publicly investable shares are US, so you would expect about half of a global investment fund to be in US shares.
    Eco Miser
    Saving money for well over half a century
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