Switching to investing...

Imma_Number

I got my toes mildly moist some years back with an S&S ISA holding an M&G Index Tracker and paying in £10pm. It's done OK (approx value £3.5k) but now that I don't have a mortgage I'm looking to invest more.

I'm thinking of leaving the M&G ISA with M&G as the TER is 0.46 (AMC 0.30), but no platform fee or inactivity charges I can see.

Then in April open a new S&S ISA with Charles Stanley Direct or III and going for a Vanguard Life Strategy fund or two. Not sure which yet. CSD seems cheaper than III until the fund value is greater than £32,000.

I'll be 44 this year and not sure when I'm likely to retire. Probably closer to 65 than 55 Based on Monevator's lifestyle guide that would be split between the 60% Equity & 40% Equity funds.

Am I thinking along the right lines?
Are there any obvious bloopers?

Ta

bigadaj

Seems reasonable, main issue is that many consider bonds poor value now, so traditional lifestyling in terms of reducing risk with age might not be the best strategy.

An example is that people might still be heavily invested in shares even when going into drawdown with their pension pot, so after they've retired effectively. As the yields are attractive though there is volatility to consider.

The other thing that springs to mind is what other assets and savings do youa have. Cash in a savings account can form part of you low risk element of a portfolio, so can compensate for a lower bond allocation in your investments.

pip895

Do you intend cashing in your ISA when you retire?


I think these guides can be a little misleading - they make sense if you are purchasing an annuity the day you retire - but if you are not you could be looking at holding your investments for another 30 years - and would be much better off with a higher equity position.

ChopperST

I'd second the cash over bond sentiment.

When (If) interest rates go up bond / guilt returns generally fall.

As you have a relatively modest portfolio at present it wont be difficult to find a home for that element of your cash. Nationwide Flexdirect @ 5% and Yorkshire building society @ 4% would be top of my list and then a Santander 123 account.

Try and decide where you are on the risk profile 60/40 does seem overly risk adverse if you are saving for retirement. But perhaps 80/20 is too aggressive for your appetite. Perhaps meet in the middle at 70/30.

GL whatever you decide. The current crisis in Ukraine certainly represents a buying opportunity if you spread your risk across geographical regions.

Imma_Number

Thanks all. I'm already quite heavily in cash atm due to circumstances. My Cash ISA:S&S ISA is approx 9:1.
I also have NW Flex account and a Santander 123.

I can probably up the risk profile quite a bit by going 100% equities for some existing money & new money for a while at least.

I'm a bit wary about transferring 10-20K lump sum into a S&S ISA all in one go atm.

Lois_and_CK

ChopperST wrote: »

and Yorkshire building society @ 4% would be top of my list

Apologies for gate crashing. Can I ask which YBS product is paying 4% please? I've had a quick Google and can't find it. Thanks!

Imma_Number

Lois_and_CK wrote: »

Apologies for gate crashing. Can I ask which YBS product is paying 4% please? I've had a quick Google and can't find it. Thanks!

Possibly meant Yorkshire bank:
http://www.ybonline.co.uk/personal/current-accounts/direct/

jimjames

Imma_Number wrote: »

I'll be 44 this year and not sure when I'm likely to retire. Probably closer to 65 than 55 Based on Monevator's lifestyle guide that would be split between the 60% Equity & 40% Equity funds.

Am I thinking along the right lines?
Are there any obvious bloopers?

Ta

I'm the same age and I have 99% equities, 1% bonds so you don't have to match the guide if you don't want to or like you say, have lots of cash.

moneyfoolish

I'm probably going to invest my complete S&S ISA for 2014/15 in a Vanguard Lifestyle product. Does anybody know which is the cheapest platform for it assuming that I will only use this fund and never buy anything else?

Imma_Number

moneyfoolish wrote: »

I'm probably going to invest my complete S&S ISA for 2014/15 in a Vanguard Lifestyle product. Does anybody know which is the cheapest platform for it assuming that I will only use this fund and never buy anything else?

I used http://www.comparefundplatforms.com
The difference seems to be when the Charles Stanley Direct's 0.25% annual charge passes the Interactive Investor's £80.

slinga

For my money if you are only in your 40s then why not try a more risky option.

Two UTs I've held as ISAs for a while and have done well are:

Old Mutual UK Select Mid Cap
and
Casenove UK Smaller Companies

You might also consider Lindsell Train UK Equity.

Now many on here will disagree.
I remember last June I posted that NSI Index Linked and Cash ISA funds were in my opinion a waste and suggested 2 UT ISA funds which I was going to switch my NSI Index linked into. One fund was a South East Asia fund which hasn't done well, the other was a UK fund. Well since last June the average increase has been 9%. Not fantastic I accept but so much better than the NSI Index Linked.

Of course all indices are at or near all time highs so it might not be the best time to invest into riskier UTs because a pull back might put you off future investing even though a bounce back will happen. But in order to utilise your ISA allowance this year you could buy into a cash ISA now, wait for a pull back of between 5% and 10% later this year and then switch from your cash ISA fund into one or of the funds I've listed above.

If you've got 20 years or more to retirement this isn't really a risky option and will undoubtedly, imo, give you so much better returns at the end of the 20 year period than the measly stuff you get from NSI or cash ISAs.

I'd do this if I was in my 40s again.
You might not but it is an option you should consider.

Look forward to comments from other posters.