Did I choose too many funds?

dunstonh

A few problems that new DIY investors tend to fall foul of are:

1 - not understanding risk
2 - fashion investing (picking what is flavour of the month and going too heavy into it)
3 - not diversifying enough

Avoid those issues and you avoid the typical pitfalls.

waltzer

Thanks. I don't think I'd trust current fashion anyway (never have with clothes at least!) and I'd be more inclined to try a wee bit of the opposite to what everyone else does. My problem I think is that the fund list doesn't allow me to manage risk effectively by using diversification. Have you come across this phenomenon before with gp SH? Is my basic logic correct re manage risk via diversifying? Would it be worth me posting what I think might be a starting mix of funds to see what others think?

dunstonh

My problem I think is that the fund list doesn't allow me to manage risk effectively by using diversification. Have you come across this phenomenon before with gp SH?

All the time. Group schemes tend to offer a limited range of funds and more often than not those they do offer are largely variations of a theme. e..g 20 funds offered and 10 of them are different UK Equity funds.

That is why I tend to tell people [who have an interest in investing] to utilise the employer scheme to get the maximum "free money" out of it but then use your own scheme to run along side it and invest in the areas not covered in the employer scheme.

You have to remember that for the majority of people, they dont give a damn about their investments unless they are looking for an excuse to moan when the 1 in 5 bad year comes along.

waltzer

Ah good. I see the picture. I will pursue the company IFA but I think I know the option (singular)...get out of lifestyle and WP and take my chances with UK, US and Euro equities. I think for the hell of it I'll maybe put minimum in and put the rest into something that offers a more comprehensive choice. Oh no! More research...Oh well, OH and I are talking about starting S&S ISA (got cash only at moment) so all this learning might not go to waste.

wonderman

You are doing just right; monitor the equity vs bond gilt ratio as you get older - more into gilts as you approach retirement.
You sound a lot more astute than most IFAs I have spoken to; they are form fillers mainly. You probably earn far more then the IFA as well.

waltzer

Ok.. firther research/dabbling has brought me to here:
1) Best to get out of SL lifestyling and WP.
2) Examine fund choice and come up with say 4 funds that might suit attitudes.
3) Say for example went with Stock Exchange fund 25% International 25% Fixed interest fund 25% and one other 25%
First 2 funds would give the following?
UK 29%
North Am 24%
Eur 18%
Jap 5.5%
Asia Pac 8%
Emerging 2.25%
Money Market 5.5%
So 50% of payments into SH goes as above, 25% payments into fixed interest plus find another fund that could further diversify or alternatively tweak the % above (eg reduce exposure to NA or Europe etc and boost re others)
Is that how it works (in broad terms)?
Doesn't seem to be any fund in SL SH portfolio that offers lowish risk? Tho fixed interest does bias investment away from volatile equities? Is that how this works?
If hypothetically a providers with profits fund was good-ish what effect would that have re smoothing out ups and downs? If alternatively it was a poor scheme might one surmise that it's essentially no different (in terms of risk/return) than just simply going with individual equity based funds that are not WP based?
Any views on this post in generic, hypothetical terms?
(Hope it makes sense)
Much obliged