Portfolio Advice

Linton

In terms of building up the portfolio you could start with say 80% in a global tracker and 20% in some sort of global passive bond fund and then focus on specific areas once you had a larger portfolio. If you allocate your savings to keep the % constant you will tend to invest more in the currently cheaper area. May add a bit to your total return.

As to your cash ISA holdings, if these represent your total cash savings then I would consider them rather, but not foolishly, high. It is very advisable to have perhaps 6 months living expenses in accessible cash to deal with emergencies. So IMHO you are at the stage where you can sensibly look to start seriously investing in equities.

gadgetmind

Hooloovoo wrote: »

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I think I'm too much a control freak to use those products
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I know what you mean.

I finally decided to use BestInvest for my passive ISAs and SIPPs. They charge £60 pa to hold shares, ETFs ot Vanguard trackers, but I decided to bit the bullet and just pay this fee.

I started with the Vanguard LifeStrategy asset allocation (but not using that tracker) and then tweaked to suit my own views of where I wanted to be over-weight. For me, this was mainly EM, small caps, and FTSE 250.

I now hold a spread of seven Vanguard trackers and some ETFs to cover FTSE 250 and corporate bonds, and I also hold some infrastructure trusts such as HICL and JLIF, and also some commercial property REITs.

For drip feeding, you'll probably want to stick to trackers with maybe the odd active fund for (say) infrastructure, property or bonds.

Hooloovoo

Linton wrote: »

In terms of building up the portfolio you could start with say 80% in a global tracker and 20% in some sort of global passive bond fund and then focus on specific areas once you had a larger portfolio. If you allocate your savings to keep the % constant you will tend to invest more in the currently cheaper area. May add a bit to your total return.

So if I were to put say 20% in LGASI that I mentioned in the first post, and then put the rest into either a global tracker or split equally between a set of regional trackers, that would be a reasonable starting point?

As to your cash ISA holdings, if these represent your total cash savings then I would consider them rather, but not foolishly, high. It is very advisable to have perhaps 6 months living expenses in accessible cash to deal with emergencies. So IMHO you are at the stage where you can sensibly look to start seriously investing in equities.

Absolutely - I have more like 6 years worth of living expenses! So I definitely need to get into the market if I want to maintain my spending power, or better still increase my wealth for retirement.

BLB53

I think you have more or less got it from your opening post.
Just a couple of ideas to throw into the mix.

I would include smaller companies - there is no index but something like Aberforth (investment trust) will do the job.

Also, might be worth buying something like City of London IT to see how the trackers compare against a managed low cost IT.

Good luck!

gadgetmind

Hooloovoo wrote: »

So if I were to put say 20% in LGASI that I mentioned in the first post, and then put the rest into either a global tracker or split equally between a set of regional trackers, that would be a reasonable starting point?

Yes, and TBH it doesn't get much simpler than that!

The only note of caution is that anything seen as safe, such as UK gilts, is currently rather over-priced. This is why I boosted my corporate bonds BUT this is not normally the right approach as these bonds are far more correlated to equities.

There is no single right answer to this problem!

You may also prefer to over-weight the UK to give yourself a home bias. The argument behind this is that it reduces currency risk while also exposing you to overseas markets as many large UK companies have a huge international presence.

gadgetmind

BLB53 wrote: »

I would include smaller companies - there is no index but something like Aberforth (investment trust) will do the job.

Vanguard have a global small cap tracker.

Also, might be worth buying something like City of London IT to see how the trackers compare against a managed low cost IT.

Vanguard also have a UK Equity Income tracker. :-)

Hooloovoo

gadgetmind wrote: »

The only note of caution is that anything seen as safe, such as UK gilts, is currently rather over-priced.

I remember reading that on here. That's one of the reasons I was going to hold off buying any and treat my cash ISA as my "defensive stock" for a little while. That might be a bad idea.

You may also prefer to over-weight the UK to give yourself a home bias. The argument behind this is that it reduces currency risk while also exposing you to overseas markets as many large UK companies have a huge international presence.

I was considering trying to avoid home bias, but you're right it would probably be better to weight the UK slightly higher if only to reduce the exchange rate risk.

gadgetmind wrote: »

Vanguard have a global small cap tracker. Vanguard also have a UK Equity Income tracker. :-)

Unfortunately Fidelity don't offer Vanguard.

Do you have any suggestions regarding obtaining exposure to Canada, South America, India, etc? Is there a good tracker that I have missed?

gadgetmind

Hooloovoo wrote: »

I remember reading that on here. That's one of the reasons I was going to hold off buying any and treat my cash ISA as my "defensive stock" for a little while. That might be a bad idea.

As long as you know what you're doing and why, that makes perfect sense to me.

Unfortunately Fidelity don't offer Vanguard.

Which is why I finally decided to go with BestInvest.

Do you have any suggestions regarding obtaining exposure to Canada, South America, India, etc? Is there a good tracker that I have missed?

A global tracker will cover all of those with an equal weighting. If you want to over-weight them, then you'll have to use some active satellites.

amictus

[FONT=&quot]Other more knowledgeable people have answered most of your questions so I think there's little more that I can add.[/FONT]

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Hooloovoo wrote: »

Making commodities a 10% share of a 10% share is practically nothing, hence my thought to start out building up a solid tracker base first. Maybe that's not the best course of action.

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[FONT=&quot]Yup sounds sensible to me. This is probably the route I would take if I was still intending to keep lower monthly payments and a large stash of cash. Seems to fit with other people's suggestion to start simple and add for diversification as the amount invested grows[/FONT]

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Hooloovoo wrote: »

I have been looking at the tracking error when I was picking out funds last night. The Fidelity pages give a year by year tracking error which is quite useful. Luckily it appears that the HSBC trackers are not only the cheapest, but also in general have the lowest tracking error! There were some other funds available for certain indices that did have a very slightly lower average error, but these had more than double the TER so I decided cheaper would be better.

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[FONT=&quot]Really?! The monevator articles I linked to and my own comparison on trustnet show HSBC are one of the worst and the total error negates the low TER quoted. Vanguard seem to be the clear winner (to the extent that might well justify paying fees to hold them), though the timespan of available data is very limited (~1 year?). I’d appreciate it you could share any data that suggests otherwise![/FONT]

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Hooloovoo wrote: »

I have been trying to work out how to do this. How would I go about drip feeding from my cash ISA without using up my current yearly allowance for S&S this year? If I did an internal transfer to keep the money within the ISA wrapper, I'd then end up with a large balance in cash earning practically no interest while it waits to be drip-fed into funds. I guess there's nothing to stop me doing several smaller ISA transfers throughout the year.

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[FONT=&quot]I’m not familiar with the process but I imagine a series of small transfers would be the best way to do it.[/FONT]

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BLB53 wrote: »

I would include smaller companies - there is no index but something like Aberforth (investment trust) will do the job.

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[FONT=&quot]Some more from monevator…[/FONT]

[FONT=&quot]http://www.monevator.com/aberforth-smaller-companies-trust/[/FONT]

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gadgetmind wrote: »

Vanguard have a global small cap tracker.

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[FONT=&quot]Thanks. I like the look of this…[/FONT]

[FONT=&quot]https://www.vanguard.co.uk/documents/portal/factsheets/global_small_cap.pdf[/FONT]


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gadgetmind wrote: »

I finally decided to use BestInvest for my passive ISAs and SIPPs. They charge £60 pa to hold shares, ETFs ot Vanguard trackers, but I decided to bit the bullet and just pay this fee.

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[FONT=&quot]Is this £60 pa fixed for an unlimited number of funds and transactions? If so it certainly sounds like the best option for access to the Vanguard fund range (if you want to hold more than just one).[/FONT]

Hooloovoo

gadgetmind wrote: »

As long as you know what you're doing and why, that makes perfect sense to me.

Thanks. It's good to know I'm not totally off the mark. I thought waiting until I'm at least approaching a 50:50 split between cash and funds would be ok before considering buying bonds.

Which is why I finally decided to go with BestInvest.

I'll have to have a better look at BestInvest. The only reason I was considering Fidelity is because I already had an old account with them and they seemed as good as any other. Certainly cheaper than HL. I've already started the change over to Cavendish now though, so that would be a waste of time. Not that it matters, it didn't cost anything.

What happens if Fidelity or BestInvest etc. go bust? I assume my money is still ok because they are just agents for the funds?