New investor help - vanguard LifeStrategy fund with a possible 2015 crash.

nickohorny

Ryan_Futuristics wrote: »

Yeah, the active vs passive debate is really about fees ...

Essentially, in the medium-term, a passive fund is a bet that broad markets keep rising - whereas an active fund may only require certain sectors or companies to rise ... they can rotate towards growth and away from danger

In the US, passives are generally seen as riskier (because without a manager, they can leave you more exposed to hard times) ... But fees can be a great equaliser over longer periods due to their impact on compound interest - it means there's pressure for an active to keep beating the market by at least its own fee

The reason the F&C fund doesn't appeal to me is because it's got quite a hefty management charge, a bid-spread (which means you lose money straight away) and doesn't seem to pay much of a dividend

For me, these are the kind of funds that can (especially if they have rough patches) really drag down the performance of actives ... Plus it's a fund of funds, which means you're paying two lots of fees

I'm not a big fan of these - neither is Warren Buffet

What I'd look for is management charges around 0.5-0.75%, and I hate bid-spreads (a high buy price and a lower sell) ... At these fees, the active/passive debate isn't very compelling, and it's more about how you want to be exposed to the markets

Two investment trusts I'd say fit the bill - if you want to just put money in and leave it to grow - could be Murray International (MYI) and the Scottish Mortgage Investment Trust (SMT) ... But these can be slow, lumbering, mammoth funds which really see their best growth over 10+ year periods (but have trackrecords stretching to almost the 19th century)

Thanks Ryan, good heads up.

I will also look into these funds myself to find out more.

ChesterDog

nickohorny wrote: »

Thank you everyone for your input, I enjoy your contribution as it is very informative. I can see now that my psychology to investing is currently being fed with doom and gloom I keep reading! hence me feeling a slight panic with it this year.

Haha Colsten, I know I know, I am reading too much into so called experts calling the end of the world! here are some scaremongering articles currently doing the rounds:

http://www.telegraph.co.uk/finance/economics/11322623/Ten-warning-signs-of-a-market-crash-in-2015.html

http://www.bloomberg.com/news/2014-11-10/predictors-of-29-crash-see-65-chance-of-2015-recession.html

http://www.profitconfidential.com/stock-market/stock-market-crash/

I think that should I invest in the LS, I would likely go down the drip feed route because although I wish I could ignore what I read, I find it hard to dismiss and would just have more peace of mind if gradually investing into the fund over the next 12 months and it does fall back significantly.

Saying that, the timeframe I will leave this money invested in the fund is long enough to ride through the market shock that is 'on its way' to hit the world this year! :rotfl::cool:

Well done. A good, sensible, considered, balanced viewpoint.

Just one thing: do not feel that you should dismiss or ignore the things that are troubling you; you should not. You should consider them carefully and thoughtfully and make a decision having reflected upon them. Just as you now seem to be doing.

So, well done.

black_taxi_2

invested for 1st time today

regular monthly investment

11/16 year horizon

nest egg---won't be rich or poor but comfortable

AlanP_2

TheTracker wrote: »

The LS funds are simply funds of funds. LS80 contains 3 equity trackers and 4 Bond trackers. Anyone who uses the "too US heavy" argument is neglecting to say it is quite simple to roll your own LS fund, in fact the OCF is lower if you buy separately, but of course you may incur extra trading costs. If you don't like the US exposure then hold less World ex-UK or build a World tracker from a few regions. Each of those internal funds has been going some time as well so I'd ignore anyone who says LS doesn't have a track record. Similarly those who decry it doesn't contain property, well you buy that tracker on the side. This board has taken a turn from investment to speculation lately and you should read the posts with that in mind.

The November 2014 VLS 80 Fund Fact Sheet has it at 9 Equity & 5 Bond Trackers although there is a definite US bias at 35.1% and, to a certain extent a UK bias as well at 20%.

I am supplementing it with a handful of other trackers to adjust the geographic profile.

So much for "passive" investing, an "active" decision about where to invest passively - that could be correct or incorrect over the next few years. :mad:

TheTracker

AlanP wrote: »

The November 2014 VLS 80 Fund Fact Sheet has it at 9 Equity & 5 Bond Trackers although there is a definite US bias at 35.1% and, to a certain extent a UK bias as well at 20%.

You're right, thanks for correcting me.

Ryan_Futuristics

AlanP wrote: »

The November 2014 VLS 80 Fund Fact Sheet has it at 9 Equity & 5 Bond Trackers although there is a definite US bias at 35.1% and, to a certain extent a UK bias as well at 20%.

I am supplementing it with a handful of other trackers to adjust the geographic profile.

So much for "passive" investing, an "active" decision about where to invest passively - that could be correct or incorrect over the next few years. :mad:

My advice: be active/passive agnostic when it comes to diversification

Regions like Europe and Emerging Markets are generally better for active funds (with low charges and good trackrecords, chances are firmly in your favour) - likewise smaller companies

Plus, active and passive give you another form of diversification (as passives are typically strong in bull markets while actives are strong in bear and sideways markets)

Ryan_Futuristics

ChesterDog wrote: »

Well done. A good, sensible, considered, balanced viewpoint.

Just one thing: do not feel that you should dismiss or ignore the things that are troubling you; you should not. You should consider them carefully and thoughtfully and make a decision having reflected upon them. Just as you now seem to be doing.

So, well done.

In my spreadsheet I'll often have a 50-60% drawdown total - basically what my portfolio would look like if stock markets suffered a big crash

It can help you assess your own risk tolerance ... If I'm 50% equities, then a 50-60% drawdown is only a 25-30% hit to capital - which as a worst case isn't that bad

It helped me realise the importance of having cash and fixed income (psychologically) - and hopefully means you'll be prepared for tough times, and not make the mistake of knee-jerk selling to cut losses

Gadfium

nickohorny wrote: »

2) I am reading an awful lot about the worst crash in a long time due for 2015.

People that predict a market rise and people that predict a market crash are usually correct *IF* you wait long enough.

Totton

Fundsmiths latest 'letter' is a good read imho, https://www.fundsmith.co.uk/lib/documents/Fundsmith%20Equity%20Fund%20Annual%20Letter%202014.pdf

Note that I am not a holder of this fund myself.

Totton

Ryan_Futuristics wrote: »

In my spreadsheet I'll often have a 50-60% drawdown total - basically what my portfolio would look like if stock markets suffered a big crash

It can help you assess your own risk tolerance ... If I'm 50% equities, then a 50-60% drawdown is only a 25-30% hit to capital - which as a worst case isn't that bad

It helped me realise the importance of having cash and fixed income (psychologically) - and hopefully means you'll be prepared for tough times, and not make the mistake of knee-jerk selling to cut losses

Good advice, I think that is correct to consider your cash holdings alongside investments, it helps to reduce the worry and has in the past reminded me to add to cash savings rather than gambling everything on the stock market :-)