£100 month to invest

mindovermatter

Hi,
I want to invest £100 a month via direct debit/standing order into a low risk fund - where do I start?
I would want to hold it for 5 years.
Best wishes
Mindovermatter

Lazy_Runner

Hi

I am afraid low risk is too unspecific.

How much would you be willing to lose before you pulled/changed the investment
0%
10%
20%?

mindovermatter

Hi,
I am willing to risk between 20-30% of my stake
Mindovermatter

wellsie82

personally i'd be popping that into a stocks and shares ISA and looking to invest it in a unit trust or perhaps into two seperate trusts to spread the risk

most such funds have an annual charge of .5-1% (I personally wouldn't pay anything higher than 1% in charges)

dunstonh

(I personally wouldn't pay anything higher than 1% in charges)

That virtually rules out about 1900 of the 2000 unit trust funds in existence. It also wipes out all the top performers.

1.5% is the typical annual management charge.

I am willing to risk between 20-30% of my stake

So, you want to invest £20-£30pm but save £70-80pm. How much risk do you want to take with the £20-£30pm?

Risk is not on/off. It is sliding scale ranging from very low to very high. Even savings have an element of risk if the interest rate, after tax, doesnt beat inflation.

wellsie82

dunstonh wrote: »

That virtually rules out about 1900 of the 2000 unit trust funds in existence. It also wipes out all the top performers.

1.5% is the typical annual management charge.

maybe so but what im saying is that i wouldn't pay more than that

debbie42

wellsie82 wrote: »

maybe so but what im saying is that i wouldn't pay more than that

That's very definite. If you could expect that a fund charging you 1.5% would return 10% p.a. more than a fund charging 0.5%, which would you go for?

Lazy_Runner

This may not fit your risk profile, but if I had that money, I would invest £50 in a UK equity income fund and the remaining £50 in either a european high income fund or a bric fund (brazil, russia, china, india incase you didn't know). I beieve there is a fund called BRIC, but not sure about any European high income funds. You can do more research at places like trustnet, citywire etc.

However as dunstonh has pointed out previously, past performance is no guide to future performance, especially if you only look at the charts over the last 5 years. The last major crash was 7 - 8 years ago, so you would need to look at 10 year charts.

Have just looked at the chart for Allianz BRIC fund and it has gone up 60% in a year. (NOT A RECOMMENDATION!)

dunstonh

maybe so but what im saying is that i wouldn't pay more than that

You must be using some poor performing FTSE100 or FTSE all share tracker then.

wellsie82

debbie42 wrote: »

That's very definite. If you could expect that a fund charging you 1.5% would return 10% p.a. more than a fund charging 0.5%, which would you go for?

good question but the return is never guranteed though

You must be using some poor performing FTSE100 or FTSE all share tracker then.

one of my funds has performed at 40% the past 12 months, my old regret is not putting enough cash into that fund but then thats hindsight

dunstonh

one of my funds has performed at 40% the past 12 months, my old regret is not putting enough cash into that fund but then thats hindsight

Just looking at my ISA, I have three funds that have exceeded that. I have one fund that has returned -4.3%. So, does that make it better or worse? The whole portfolio sits at 35.7% in 12 months. So, having one fund exceed 40% doesnt mean anything in the same way as having one fund return a loss. In any diversified portfolio, you will get funds that underperform, some as you expect and some that go way above. You dont measure the portfolio by the worst fund or the best fund.

If you are a unit trust/oeic/sicav investor then limiting yourself to funds of 1% or under is limiting the potential for your portfolio to perform. It is also likely to be hit with risk issues as most property funds and fixed interest funds arent available at 1.00% either (a few fixed are).

When you invest, the top priority is where and how to invest. Tax wrapper and charges are secondary concerns.