New to investing - advice needed please

LookingToTheFuture_2

I've decided to open a Stocks & Shares ISA for the first time. I've read loads of posts on this forum and also the links that people have posted. I've gone from having zero knowledge on the subject to having a fair grasp of the basics but I realise that I still don't know enough yet to pick the right funds to achieve the required level of diversification.

Therefore I've decided that the best funds for me to start off with are Vanguard Lifestrategy 80 and Blackrock Consensus 85 with 50% of my money invested in each fund. I know that they're very similar but they have different core holdings so I thought that having both would add an extra level of diversification. Does this sound sensible or would I be better to pick one or the other?

I know I've chosen a high level of equities to start off with but I'm only planning to invest about a quarter of my total savings for now, with the rest left in high interest current accounts. Does this level of equities seem reasonable for a beginner? I would say I have a medium attitude to risk.

Lastly, I am still undecided about which platform to choose. I want to make regular monthly investments and it will be some time before the total will exceed 20K, so I'm still wavering between Charles Stanley Direct and Hargreaves Lansdown. I know CSD are cheaper, but many posts on here suggest HL are easier to use, especially for a beginner. Plus I'm sure I read somewhere that you can vary the monthly payment with HL. I would be grateful for any advice on the best platform to use.

Thanks for reading this far, and I'll be grateful for any comments you have on the above.

A_Flock_Of_Sheep

I think there comes a point where diversification becomes diworseification.

Azza_1

In essence they are designed to do the same thing. The Blackrock doesn't have defined boundaries for its asset allocation though. Meaning the allocation for equities isn't fixed at 85% it can change over time. The Vanguard is however fixed.

I believe with CSD if you're paying monthly DD into an ISA or trading account you have to fill out a form and post to them to ammend how much you're putting in, whereas with HL you can change it online.

LookingToTheFuture_2

A_Flock_Of_Sheep wrote: »

I think there comes a point where diversification becomes diworseification.

Great pun, but I'd love you to elaborate on this observation!

El_Torro

LookingToTheFuture wrote: »

I know I've chosen a high level of equities to start off with but I'm only planning to invest about a quarter of my total savings for now, with the rest left in high interest current accounts. Does this level of equities seem reasonable for a beginner? I would say I have a medium attitude to risk.

I'd say the crucial thing here is how long you're planning to invest your money for. If you want the money back in a year or two's time (e.g. for a deposit on a house) then equities aren't necessarily the best place to go. If you're thinking longer term then I think it's a good idea, even with a medium attitude to risk.

Linton

LookingToTheFuture wrote: »

......

Therefore I've decided that the best funds for me to start off with are Vanguard Lifestrategy 80 and Blackrock Consensus 85 with 50% of my money invested in each fund. I know that they're very similar but they have different core holdings so I thought that having both would add an extra level of diversification. Does this sound sensible or would I be better to pick one or the other?

......

Its doesnt sound sensible. Both funds will invest in much the same things though with different %'s. So by buying both you are effectively creating another fund with yet another set of %'s. Why? Normally one would use different funds to invest in a focused way in different types of investment.

As you are just starting with regular investments and so will not have a large amount invested for a while I suggest you look at the details of your two chosen funds and pick the one that you feel is best. Both invest in a very wide range of shares and bonds so it probably wont make much difference which you chose. After perhaps a year or two you could consider buying additional funds in specific areas that you feel may give a better return.

LookingToTheFuture_2

Azza_1 wrote: »

In essence they are designed to do the same thing. The Blackrock doesn't have defined boundaries for its asset allocation though. Meaning the allocation for equities isn't fixed at 85% it can change over time. The Vanguard is however fixed.

I believe with CSD if you're paying monthly DD into an ISA or trading account you have to fill out a form and post to them to ammend how much you're putting in, whereas with HL you can change it online.

The difference between Blackrock & Vanguard is interesting. Does this mean that Blackrock are more flexible in regards to reacting quickly to changes in the market? Unfortunately the Vanguard 80 fund was only launched in 2011 so there's not really a lot of data to compare the performance of the two funds over the years.

Thanks also for the information about CSD monthly DDs. I suppose I have to decided whether the convenience of doing everything online with HL is worth paying an extra 0.20% for.

LookingToTheFuture_2

El_Torro wrote: »

I'd say the crucial thing here is how long you're planning to invest your money for. If you want the money back in a year or two's time (e.g. for a deposit on a house) then equities aren't necessarily the best place to go. If you're thinking longer term then I think it's a good idea, even with a medium attitude to risk.

Sorry, I meant to put that information in my first post. I'm looking to invest for a minimum of 15 years.

LookingToTheFuture_2

Linton wrote: »

Its doesnt sound sensible. Both funds will invest in much the same things though with different %'s. So by buying both you are effectively creating another fund with yet another set of %'s. Why? Normally one would use different funds to invest in a focused way in different types of investment.

As you are just starting with regular investments and so will not have a large amount invested for a while I suggest you look at the details of your two chosen funds and pick the one that you feel is best. Both invest in a very wide range of shares and bonds so it probably wont make much difference which you chose. After perhaps a year or two you could consider buying additional funds in specific areas that you feel may give a better return.

Thanks for this good advice. Yes, I'm hoping that a year from now I will know a lot more about investing. I'm going to buy a couple of books that have been recommended in other threads as well as continuing to read this forum. So I will stick with one fund for now then look at adding more later. I'm planning over the next few years to gradually reduce the % I keep in long term cash savings and increase the % of investments.

bigadaj

Don't forget the exit fees with hl. With one or two funds and small amounts then it may not be critical, but will make it harder to swap to a new platform in future potentially.

LookingToTheFuture_2

5

bigadaj wrote: »

Don't forget the exit fees with hl. With one or two funds and small amounts then it may not be critical, but will make it harder to swap to a new platform in future potentially.

I phoned CSD today for some information and they seem very helpful so I've decided to go with them. An extra 0.20% with HL doesn't seem much but I know it could add up to quite a lot in the long term, and as you rightly say there will be large exit fees to pay if I want to change platforms in the future.

Thanks to everyone for your advice.