20 year investment

bowlhead99

cwrw wrote: »

Many thanks for the replies. I will continue to look but I am running out of time.

Running out of time? I call B.S.

You are talking about a 20 year investment, over which time, at 7% p.a. compound return, you might quadruple your investment. Of course, in the last year or two you might lose 30% quite easily on your equities and you might not even double your money overall, depending what the economy does. And that 7% return is nominal before inflation, so who knows what it will actually be worth.

So, to your point. "Running out of time"? You don't know what the markets will do next week or month or year. If you defer investing, nobody is going to take your money off you if you didn't invest it. Inflation will erode it by 0.1-0.2% a month while it sits in your bank account for now, but you can beat that after tax with top current accounts. In a fund, you might lose 1% or more per month. Or make that, if you were pretty lucky.

So IMHO there is absolutely no reason to do something you are not crystal clear on in case you "run out of time". Saying you are out of time is a dumb irrational excuse for going and doing something you are unsure of, so you can use the excuse later if you're not as lucky as you hoped you would be, and blame problems on somebody or something else. You have over 7000 days before the 20 years is up and no stated objective at that point anyway. On every day, the FTSE might move a percent up or down. So forget that line of thinking you are out of time.

I think I get the gist of what is said regarding the fund of funds eg VLS perspective - if I'm willing to keep a steady course when the chips are down and leave my investment I will most likely turn out an average of 5-8% per year over a 20 year duration. But the downside would be that during the less profitable years I could have been investing in more responsive funds (active).

however, you don't know if they would have done better or worse. In the bad years a non equity fund is probably better whether it is active or passive.

It is a rather basic understanding but that is why I thought of the 50/50 split between VLs/other and actively managed stock as woodford / developing countries active funds. Going the right direction?

In some senses, Woodford is less risky because he is looking at income paying shares which might be a safer haven in a downturn. In other senses he is more risky as he is not very "global" and known for putting a lot of money in UK and US high yield stuff with less in growth, e.m. etc and he is looking at equities rather than other asset classes. There is no guarantee that UK high income is the best place to be over next 20 yrs though inevitably it will work sometime.

There is nothing fundamentally wrong with having some active funds and some passive ones and some developed stuff and some developing stuff, as long as you end up with some sensible overall exposure and are happy with how much you could lose in a bad year. Most people would not be equities only, but it would work for some, it really depends on person and attitude and knowledge/ understanding (or perceived understanding) of what you want.

You were talking back in April of £10k plus £100pm in one thread and then in another thread talking about returns on, say, £1300 at end a of a year. So I'm not sure how much you plan to put to work. But I suspect you could wait until you're happy with your choices and have considered all the angles. You might feel you are already there. If not, from here that could be a few hours or a few months away.

cwrw

I feel like I've been told off - every day's a school day! Many thanks for the uptake Bowlhead99, well appreciated that you dug out my history and gave an informed reply. I do not pretend to know anything but I do learn ....eventually! I will take on board what's been said, but am still to a degree perplexed by the choice of funds etc. THANKS.

cwrw

I do not mind doing a yo-yo over the next few years as risk is relatively high, but it is the likelyhood of greater end gains which I'm interested in - tapering towards bonds etc 15 years in or so. Is this too heavy on U.S as the market is relatively high?

How does this sound:

46%
Legal and general US tracker + PARHAPS Legg Mason US smaller companies or similar

15%
Blackrock emmerging markets equity tracker
Lazard emerging markets(institutional)

8.5%
Blackrock Japan equity tracker

13%
Blackrock continental european tracker

17.5%
Unicorn uk income fund class B
Woodford equity income

ChopperST

You are continuing on your high risk profile with an 100% equity allocation. For a 20 year time scale I'd consider some bond allocation.

If you are using trackers for global exposures then you have missed off the Pacific indices.

Any particular reason you've chosen the active unicorn fund as opposed to a tracker for the UK exposure?

TCA

cwrw wrote: »

I do not mind doing a yo-yo over the next few years as risk is relatively high, but it is the likelyhood of greater end gains which I'm interested in - tapering towards bonds etc 15 years in or so. Is this too heavy on U.S as the market is relatively high?

With the kind of indices you suggested, you might have another look at Vanguard LifeStrategy or BlackRock Consensus funds. The automatic rebalancing of VLS might save you a lot of bother when your specific index allocations start to go out of kilter. But if you're happy to DIY it and go heavy on emerging markets, then that's fine and most people would recommend rebalancing your allocations periodically. As often mentioned on here, the Monevator website is an excellent source of info for index/passive investing.

As for "greater end gains", remember with index investing, you only get the market return of each index. There's no attempt to beat anything or outperform. That's where active fund management comes in.

cwrw

CHOPPER ST "Any particular reason you've chosen the active unicorn fund as opposed to a tracker for the UK exposure?"
I had a look at the stats and it looks like it outperforms the market + it is a good small cap fund to compliment Woodford income uk which is mostly made up of bigger companies.
CHOPPER ST "For a 20 year time scale I'd consider some bond allocation."
I was initially thinking of a 20% bond (strategic) allocation but thought that an all equity portfolio would optimise gains in the longer term (15 years, then allocating 40% bonds/alternative investment perhaps in the last 5 years).

TCA "With the kind of indices you suggested, you might have another look at Vanguard LifeStrategy or BlackRock Consensus funds "
I was thinking that the weighting of the allocations were not as I was
looking for but with hindisight I could make this up with allocation of active funds.

TCA "As for "greater end gains", remember with index investing, you only get the market return of each index. There's no attempt to beat anything or outperform. That's where active fund management comes in."

That's why I thought of incorporating passive and active funds within my allocation (ideally 50index/50 active in the end), but having difficulties in finding solid active funds - suggestions?;)

PS Am I still on the right track with pushing US holdings to 46% even though it is a relatively high market at present?

TCA

cwrw wrote: »

That's why I thought of incorporating passive and active funds within my allocation (ideally 50index/50 active in the end), but having difficulties in finding solid active funds - suggestions?;)

PS Am I still on the right track with pushing US holdings to 46% even though it is a relatively high market at present?

It's just my own preference, but for my active selections I'm using investment trusts as opposed to funds.

With regard to your percentage of US holdings, nobody can say whether you're right or wrong. Based on market capitalisation, if that's your thinking, then you're probably not far off the mark. Vanguard's All World ETF allocates about 48% to the US.

https://www.vanguard.co.uk/uk/portal/loadPDF?docId=1011

cwrw

TCA wrote: »

It's just my own preference, but for my active selections I'm using investment trusts as opposed to funds.

Vanguard's All World ETF allocates about 48% to the US.

What are the advantages to this?
Cannot find this vanguard stock in H+L, but have found Vanguard SRI Global Stock or alternatively Blackrock consensus 100 class 1 (accum)

kidmugsy

Thrugelmir wrote: »

Out of curiosity what's an aggressive fund?

It's bad-tempered and repeatedly threatens violence.

TCA

cwrw wrote: »

What are the advantages to this? Cannot find this vanguard stock in H+L, but have found Vanguard SRI Global Stock or alternatively Blackrock consensus 100 class 1 (accum)

Investment trusts are closed end investments. Plenty info on them and their benefits here:

https://www.theaic.co.uk/

And here's the ETF I mentioned on HL:

https://www.hl.co.uk/shares/shares-search-results/v/vanguard-funds-ftse-all-world-etf-usdgbp