getting the timming right for index funds

patoli

Hello,

I would like for the first time in our life to invest both our annual ISA allowance of £11520 in index fund trackers.

After doing some research I plan to open 2 TD direct accounts and choose 2 Vanguard LifeStrategy Funds.

I’m thinking since all our savings are invested in various bonds I could choose something more risky for this part of our investment as we are looking at a 20 years window so 100% equity or 80-20% ?

For mysell for example: Vanguard FTSE U.K. Equity Inc Idx Acc


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And to diversify and mix it up for my otherhalf: Vanguard LifeStrategy 100% Equity A Acc

Or maybe I should get the first one for both of us ?????

When investing in those type of index funds trackers, is there a better period or time, if so what should I be on the lookout for?

Or is it a case that since the fund is investing in all parts of the world it is impossible to determine a best time, so might as well put it all in today no matter what?

Anyway As you can see I am a complete novice although I have read one book “the intelligent investor” (understood some of it) and this is why I am choosing the safer route (index funds) to invest into the stock market. I know I am saying safer when above I'm talking about a 100% Equity but in index funds though.

Any opinion would be greatly appreciated as my index finger is itching to make my move but my favorite saying still remains, “check, check wait a while then check again!”

Ta :beer:

marathonic

I think the Vanguard Lifestrategy Funds are diversified enough for most people. They're also like to overlap significantly with a lot of the other funds you might choose - so whilst you think you are diversifying, you are really increasing your allocation to a certain area beyond what you would really like.

Nicholas-bloody-Parsons

Wait for a day when the index drops over 100 points, has done me well in the past.

Frankly I would spread my investments over time and funds.

You may find that the "deal cut off time" for these funds are 12pm midday. (pls check) . If you buy after that time your purchase is processed the following day.

Its worth bearing this in mind, as you may well think that you are buying the ftse one morning at -100, but when they process it, it may be +100!

marathonic

Nicholas-bloody-Parsons wrote: »

Wait for a day when the index drops over 100 points, has done me well in the past.

Frankly I would spread my investments over time and funds.

You may find that the "deal cut off time" for these funds are 12pm midday. (pls check) . If you buy after that time your purchase is processed the following day.

Its worth bearing this in mind, as you may well think that you are buying the ftse one morning at -100, but when they process it, it may be +100!

The single day returns are meaningless. What if you have the funds available to invest and the index rises by 30 points per day for two weeks before you see a 100 point drop?

Better to invest as soon as you have the money and, if you consider that too risky, split your investment up and invest in the form of six equal, monthly or bi-weekly investments.

AlwaysLearnin

Just to make sure you're aware, there will be a 0.35% charge for holding the Vanguard funds on TD from August:

http://www.tddirectinvesting.co.uk/investment-choices/funds-unit-trusts-and-oeics/introducing-clean-funds/

The exit fees are fairly high too

patoli

AlwaysLearnin wrote: »

Just to make sure you're aware, there will be a 0.35% charge for holding the Vanguard funds on TD from August:

The exit fees are fairly high too

Thanks for that but even after reading it I'm not entirely sure of the outcome so I 've dropped a line to TD to know exactly where I will be standing.

patoli

AlwaysLearnin wrote: »

Just to make sure you're aware, there will be a 0.35% charge for holding the Vanguard funds on TD from August:

The exit fees are fairly high too

So I just got this reply but not too sure what she means by trail commission though?

Hi,

Thank you for replying. Both of the funds you mention are eligible to be held in an ISA, so you would be able to hold them in a Stocks and Shares ISA with us.

As far as charges are concerned, there is no charge if you purchase the funds online. If the fund pays trail commission of less than 0.5% there is no platform fee, if the fund pay trail commission of more than 0.5% annually, there is a platform fee of 0.35% of the value of your holding. For more information on our rates and charges, please see our rate card.

Best wishes,

Fiona

IronWolf

If you want to avoid potentially investing at a high point, you could split your sum into 10 equal parts, and then invest 1/10 each month over the year. That way you get the average level over the year.

Of course if you have dealing costs on this it multiplies them by 10.

primalgeek

I'm confused:

After doing some research I plan to open 2 TD direct accounts and choose 2 Vanguard LifeStrategy Funds.

and:

For mysell for example: Vanguard FTSE U.K. Equity Inc Idx Acc

This fund is not a LifeStrategy Fund. I know the original question was more about market timing, but I thought that the confusion should be pointed out in case you end up buying something that you didn't intend

Shaolin_Monkey

patoli wrote: »

So I just got this reply but not too sure what she means by trail commission though?

Hi,

Thank you for replying. Both of the funds you mention are eligible to be held in an ISA, so you would be able to hold them in a Stocks and Shares ISA with us.

As far as charges are concerned, there is no charge if you purchase the funds online. If the fund pays trail commission of less than 0.5% there is no platform fee, if the fund pay trail commission of more than 0.5% annually, there is a platform fee of 0.35% of the value of your holding. For more information on our rates and charges, please see our rate card.

Best wishes,

Fiona

None of the Vanguard funds pay trail commission. They all have TER's of less than 0.5%. On TD's platform if you choose "Clean Funds" on the drop down menu it restricts the list to funds that don't pay commission.

What happens if you have a standard commission paying fund is that they rebate the trail commission (typically 0.5% p.a.) into your account and deduct the platform charge (0.35%) from this rebate. Now HMRC have said they will tax rebates paid to non ISA accounts, I don't know whether they will change policy going forward.

What they don't tell you in the reply above is that from August non commission paying funds will be subject to a 0.35% platform charge too. They are free from charges for the moment as a limited time promotion.

patoli

What they don't tell you in the reply above is that from August non commission paying funds will be subject to a 0.35% platform charge too. They are free from charges for the moment as a limited time promotion.[/QUOTE]

Just received this email from TD customer services which is a little confusing, well perhaps is just me who does not get it, All I want to know is how much all together I will pay out in charges, commission and so on ???

Is is just 0.35 (TD) +0.35 (vanguard) so 0.7 or Am I missing something?

Trail commission is the rebate that the fund manager pays to ourselves as a broker for you holding the shares through ourselves. The trail commission is usually included with in the funds annual management charge, so you wouldn't see it as a separate figure before these regulatory changes have come in. When you are charged the platform fee, the trail commission that is paid to us by the fund manager is credited to your account, and the platform fee is taken as a separate charge, so that you can see exactly how much this is costing you in regards to the commission paid to ourselves for holding the fund with us.

Currently, if a fund has a trail commission of less than 0.5%, we will credit your account with the full trail commission and not charge a platform fee. For funds with a trail commission of 0.5% or more, we will again credit your account with the full trail commission, but then charge a platform fee of 0.35% ourselves. This will help you see the full cost of holding the funds with ourselves and can be more easily compared to other brokers to help you determine which is the right broker for you to hold your funds.

From August all funds will have a 0.35% platform fee charged if they are held with ourselves, regardless of the amount of trail commission paid to ourselves. All trail commission paid to us from the fund manager will continue to be credited back to your account.