Rate my S&S ISA

Albert_Tatlock_2

I’ve pretty recently started making monthly savings to a S&S ISA with Hargreaves Lansdown. I have two children and the aim of my saving is to be able to financially assist when, in 10 years or so, they’ll be thinking about University or buying a flat or something.

As I said, I’ve only recently started doing this so this is what I hold so far:




I’m putting £250/month into it, very recently increased from just £100/month.

I now buy this each month: £100 of Fundsmith Equity and £50 of the rest.

I have tried to get a balanced spread between UK Equity, Global, and Emerging Markets. I’m in this for the long haul and do not expect to require the money for 10 years +

I’m prepared to take a bit of risk, i.e. if I did £250/month into a current or savings account paying 3% I’d expect it to be worth £35k in 10 years, so I'm prepared to take a bit of a punt on beating that.


This is all new to me - but am I doing the right thing with my money?

Your_Hero

You may want to use HL's portfolio x-ray scan to look at the underlying assets of the funds you've chosen

You mentioned that you're prepared to "take a bit of risk" but this is quite subjective as to what you really mean. From your chosen funds, it appears that you are almost 100% weighted in equities from my brief glance.

This is normally extremely high risk and unsuitable for most investors and likely to be less suited to someone just starting out in your position. I would suggest a better asset split for more diversification or even simply use 1 or 2 good quality multi-asset funds instead of trying to put together a portfolio of funds (as you are doing now).

dunstonh

Rate my S&S ISA

Just over £1000 held but spread across 4 funds with no identified asset allocation model from those 4 funds.

I’m in this for the long haul and do not expect to require the money for 10 years +

10 years is short term for a regular. 15+ is ideal.

I’m prepared to take a bit of risk

The funds you have chosen indicate a lot more than a bit. You are way above the average UK consumer in terms of risk (but we dont know what other assets you have to offset it and we dont know what your capacity for loss is with this money)

For such a small amount you have over complicated it, probably gone over risk (especially given timescale) and lack descent diversification. I would have used a multi-asset fund until you built up a larger amount.

Albert_Tatlock_2

Thank you for your responses. I thought I'd made a good job of my DIY investing but perhaps not

Is multi-asset fund aka multi-manager fund?

http://www.hl.co.uk/funds/multi-manager-funds

dunstonh

Albert_Tatlock wrote: »

Thank you for your responses. I thought I'd made a good job of my DIY investing but perhaps not

Is multi-asset fund aka multi-manager fund?

http://www.hl.co.uk/funds/multi-manager-funds

They are multi-asset funds but not the only ones and you can get better and cheaper.

Albert_Tatlock_2

Where might i find such a beast?

Any pointers into good ones or at least places to read up on them, please?

dunstonh

Where might i find such a beast?

The same process you used to research the funds your bought. So, instead of researching the global emerging market funds, you research the mixed equity funds. There will be good, bad and indifferent as there is in every sector. HL will offer most of the multi-asset funds on the market.

Your_Hero

Albert_Tatlock wrote: »

Thank you for your responses. I thought I'd made a good job of my DIY investing but perhaps not

Is multi-asset fund aka multi-manager fund?

http://www.hl.co.uk/funds/multi-manager-funds

Multi-asset and multi-manager is not the same thing.Multi asset refers to the diversification of assets within a fund (can be a single manager or multi-managed).

Read here if you want to understand further: http://www.ftadviser.com/2013/10/23/investments/multi-manager/multi-asset-against-multi-manager-SEJ8nVHM0lbofrh4fBsAdM/article.html

Just like all funds, multi-asset ones having differing levels of risk and so you need to be sure that you are comfortable with the one you choose.

Albert_Tatlock_2

Very helpful, chaps.

By the looks of things, I should be thankful I only got a grand into this journey.

Still, it'll be interesting to see what my £100's worth of Global Discovery grows up to be when its 10 years old :-)

bigadaj

Albert_Tatlock wrote: »

Very helpful, chaps.

By the looks of things, I should be thankful I only got a grand into this journey.

Still, it'll be interesting to see what my £100's worth of Global Discovery grows up to be when its 10 years old :-)

Sounds as though you need to do a bit more reading, tim hales smarter investing is often quoted as a good read.

There's no right or wrong methodology but you need to understand what you're doing and why you're doing it. Using the X-ray tool on hl, or trustnet, will quickly show your weighting in equities, bonds or other asset classes, geographical spread and weighting and risk and volatility, though the latter terms are quite subjective.

One starting point is to use something like vanguard lifestrategy or blackrock consensus as cores of your protfolio which cover a good geographical spread, you choose the equity and bond weighting and they automatically rebalance. This strategy doesn't cover some areas, such as smaller companies, has very limited emerging market exposure, commodities, property etc but you can look at side funds for these, though minimum £50 monthly investment limits may make this tricky with smaller sums.

jamesd

You're doing fine for someone starting out. Learning is expected, not something to regret.

The Jupiter Merlin range of multi-manager funds is a good one.

High equity weightings early on in an investment plan tend to be good because those have the greatest growth potential. The problem is that newcomers can also be surprised by pure equity drops in a bad year and may give up on investing, so it's quite common to suggest starting at lower volatility to reduce the chance of that.

To give you some idea of volatility expectations you might expect the UK's FTSE All Share Index to drop by 20% a few times every ten years and to drop by 40% once or twice. Overall it has historically increased by about 5.1% plus inflation a year compounded, in spite of the ups and downs along the way.

An emerging markets fund might well drop by 70-80% or more in a bad year. A bond fund by 10=20%, though there's reason to believe that bond prices, particularly for long duration gilts (UK government bonds) are at price levels that will make for some significant and not recovered drops after a long run of increasing prices.