Best broker for index investing with vanguard when starting with a small balance

deeppo0ckets

Aww!

My lack of discipline has certainly scuppered me in the past. I have been know to suffer the odd budgeting malfunction.

The temptation to dip into cash savings has often been too great for me. If I blow my savings on day to day expenses, Im sure I'm almost always better off with a DD setup to leave my account on the 1st of the month, no matter which way the markets blow

edinburgher

I have just started a monthly investment plan into Vanguard LS 60 Acc fund through Cavendish and there are no charges except for the 0.10% Cavendish charges.

You might want to double check that...

I've found CSD to be very reliable for the price charged, a happy customer.

enthusiasticsaver

edinburgher wrote: »

You might want to double check that...

I've found CSD to be very reliable for the price charged, a happy customer.

I know that the Vanguard charge is 0.24% for the fund but my welcome letter from Cavendish says dealing charges are 0.10% on my monthly investment plan with no initial charges. This is not being held in an isa initially though as I have used up this year's allowance. MSE recommends them as one of the cheapest online fund providers. Am I missing something?

tigerspill

deeppo0ckets wrote: »

I will initially be investing £400 a month, increasing that by another £4-600 by the middle 2015 once some short term savings goals have been met (wedding & home deposit). I plan to retire as early as possible and live off the return of my investments, hopefully within 10-15 years. I've worked out I need to save around ~£350,000 which is achievable and doesn't factor any increases in my income (or inflation). That's perhaps a simplistic approach, I'm still working on fine tuning the details.

I'm also on the NHS pension scheme, but don't really rate it given the governments ability to change pension policy whenever the mood strikes, so I'll keep contributing until I retire and defer any claim on it until I hit 65.

Perhaps you are right about the fund being too conservative, I had reservations about it too and was going to do a bit more reading on the long term risks of leaning towards 80-100% equities for a 15 year plan. I did consider changing the fund nearer retirement to a less risky fund.

If your investment plans relate to retiring and pension, it would be worth looking at the details of what your NHS pension allows you to do.
Some allow you to make additional contributions (added years or AVCs). If there are options you may be able to do this using what is called salary sacrifice where the payments are taken from your salary at source. That means (need to check tho.) for a basic rate tax payer you save other 20% gas and I think 12% NI contributions (40% plus 2% for HR tax payers). This can add a LOT to your pension pot.
My thinking over the past week or two is that this seems like a great option for me. You can take up to 25% tax free when you retire (watch for commutation). I am not all the way through my own detailed analysis on this yet, but will be in the next few days hopefully.

edinburgher

Am I missing something?

Those are the ISA charges (OP will need to pay the platform fee etc.) This may not be the case for you, I had (wrongly) made the assumption that you had an ISA with them, OP probably will have an ISA as they have discussed cash ISAs already.

edinburgher

watch for commutation

Hopefully this wouldn't apply to AVCs, only extra years?

deeppo0ckets

The problem with the NHS pension scheme is I'm 40 years away from retirement age if I stick with the scheme, with the present scheme 2008+, or I can retire early at 55 and take a 40-50% (don't have exact figures to hand) penalty on the pot which isn't an economical savings plan.

I'm actually hoping to retire in 15 years max, at the age of 42. I can do it by saving 65% of my current income, and even sooner if my income improves presuming I can avoid lifestyle creep. It's going to be [STRIKE]tough,[/STRIKE] easier than working another 40 years, and worth it in the long run.

If I work for another 15 years, then defer the NHS pension scheme, there will be a nice pot of cash waiting for me on my 65th birthday.

Ryan_Futuristics

deeppo0ckets wrote: »

Any tips on timing the market then JohnRo?

Thanks, some sound advice.

Buy when the SMA50's above the SMA200; sell (or short) when it's below



(I know the popular narrative is that market timing is a myth, but I think that says more about how many amateur investors try to do it on guesswork, and how distant many popular commentators are from the world they claim to inhabit)

PS - using this (the very simplest) method, the FTSE 100's been on a SELL since about the middle of October ... I wouldn't be lump-summing at the moment

Mistermeaner

deeppo0ckets wrote: »

The problem with the NHS pension scheme is I'm 40 years away from retirement age if I stick with the scheme, with the present scheme 2008+, or I can retire early at 55 and take a 40-50% (don't have exact figures to hand) penalty on the pot which isn't an economical savings plan.

I'm actually hoping to retire in 15 years max, at the age of 42. I can do it by saving 65% of my current income, and even sooner if my income improves presuming I can avoid lifestyle creep. It's going to be [STRIKE]tough,[/STRIKE] easier than working another 40 years, and worth it in the long run.

If I work for another 15 years, then defer the NHS pension scheme, there will be a nice pot of cash waiting for me on my 65th birthday.

Good luck with all that but you should watch out for life getting in the way.

I'm all for retiring early and working toward that goal myself but I suspect at 25 there is alot you have not done yet which will impact on such plans; most importantly did I read you have not yet bought a house? One of key steps imo to early retirement is to outright own your home.

Between 25 and my present age (35) I have been made redundant, got married, had a kid and got divorced - all of which cost serious dough and inevitably prolong retirement plans: and worthy of note they are the best things that have happened to me so wouldnt change them (the kid and the divorce that is)

Currently buying my first house for the 2nd time :rotfl:

Good luck

tigerspill

edinburgher wrote: »

Hopefully this wouldn't apply to AVCs, only extra years?

But if going the AVC route and you take too much out while trying to extract the max. tax free amount of 25%, and this is more than the AVC/Lump Sum total - would this not commute your ongoing income?