Need a nudge to take the plunge

noggin1980

Hi guys, I've been meaning to start saving in a stocks and shares ISA but the amount of options has led to me always wanting to research more and never actually taking the plunge. This seems silly of me so I'm just going to jump in and make a start with something simple.

I've been reading and like the passive approach, I was going to chose my own selection of funds but I think that has been the main barrier into getting started so I think I'll avoid that with a Vanguard Lifestrategy 60%. I'm right in thinking I want the ACC fund? that reinvests dividends etc without me having to touch it?

This investment is going to be for the long term 20 years + I will start with a lump sum of 5k and save £500 a month. Ideally that will increase to £1250 so we are saving the full £15k a year but for now £500.

Ideally I would like 70% in shares and so in future would add another fund, maybe like 10% in a developing markets one.

I've been struggling to work out who I should go with, Cavendish Online seems like a good choice.

Am I on the right track? should I be choosing a different platform or anything? I'm dead set on passive so no need to share if you think I'm wrong on that thanks.

Thanks for any help or confirmation that can help me to take the step.

ChopperST

For the amounts you are talking Cavendish / Charles Stanley would be your best bet in terms of fees. For a 20 year time scale I would say 60% equity is slightly on the conservative side but if you are more risk adverse then it is appropriate for you.

As your portfolio grows to around £18k consider switching to a fixed fee broker as opposed to % based.

bowlhead99

Sounds like the right track. Whether VLS 60 is right or wrong for your needs is something we can't possibly answer. There are lots of threads about that range of funds and you know what it holds, so it's up to you!

You are right that the ACC one works best: you don't need the cash from the dividends because you're trying to grow the pot inside an ISA wrapper not take out the income; and you don't need the dividends to be split out in different cashflows to help with tax calculations as you're doing it in an ISA and tax is not relevant.

For fund platform comparisons you can search for 'Snowman's spreadsheet', a member here who came up with a good tool. Or there are other tools online, but basically Cavendish is probably fine, as the annual fee is one of the lower ones and they don't charge for monthly topups.

So, ACC fund makes sense, choice of fund is up to you, choice of platform is up to you.

There are threads about cavendish and about vanguard, and indeed about other platforms and other funds, if you want to umm and ahh longer. If the platform is not an outrageous price, it comes down to whether the returns and risk /volatility of that fund is in line with what you can handle and whether the range of returns will generally achieve your goals. If you really want 70% equities you could buy an 80% fund and add bonds / real estate later, or you could buy a 60% fund and add generalist or specialist equities later. Again, up to you.

Obvious alternatives to a homemade "VLS 70" would include Blackrock Consensue 85 or a L&G Multi-index 5 or 6, or a whole load of more actively managed stuff that you'd find in the 'mixed investment 40-85%' bracket on search tools.

noggin1980

ChopperST wrote: »

For the amounts you are talking Cavendish / Charles Stanley would be your best bet in terms of fees. For a 20 year time scale I would say 60% equity is slightly on the conservative side but if you are more risk adverse then it is appropriate for you.

As your portfolio grows to around £18k consider switching to a fixed fee broker as opposed to % based.

Thanks yes the 60% is more conservative than I'd planned but I think I'd then like to add another fund to diversify away from America a bit more, or add something a bit more risky like 10% in developing markets or perhaps a sector I'm passionate about.

I just want to start with something solid and then can add a splash of fun, I thought If I'd gone with the 80% I wouldn't feel it was a good idea to do that.

If I were going to move platforms in future anyway should I go with Fidelity? the yearly charge is 0.1% more but there is £100 cashback (topcashback/quidco) for opening a £5k nisa with them, if I moving in a few of years thats the most profitable I think?

ColdIron

I would put any 'cashback' deal at the very bottom of my list of priorities, choose the platform that serves your needs best. Don't forget many platforms have exit fees so it may be a false economy, not to mention the related inconvenience

laughingboy

ChopperST wrote: »

For the amounts you are talking Cavendish / Charles Stanley would be your best bet in terms of fees. For a 20 year time scale I would say 60% equity is slightly on the conservative side but if you are more risk adverse then it is appropriate for you.

As your portfolio grows to around £18k consider switching to a fixed fee broker as opposed to % based.

Could you enlighten me which platform you had were thinking with the 18k in mind?
Thanks

Ryan_Futuristics

bowlhead99 wrote: »

Sounds like the right track. Whether VLS 60 is right or wrong for your needs is something we can't possibly answer.

I think I can reasonably well

I can at least say most of that fund is US equities and bonds ... Both currently at some of the worst valuations and poorest yields in over 30 years

There are far more experienced investors and fund managers selling those two broad asset classes right now than buying

Why is Vanguard LS flavour of the year?

Well half a decade of aggressive QE has done two things: inflated US equities, and inflated bonds ...

You're arriving at the party when the sensible girl is filling bin bags with half finished cans of Fosters, and the few remaining guests are face down in the sofa snoring

Not making a straight prediction here ... US QE could restart if things go backwards - some believe the US won't let this fail ... Or it could prove to be a huge mistake and the economy could find itself back when it started, but with much more debt, and relatively fewer options ... Guess which one most economists think more likely?

Herbalus

Ryan_Futuristics wrote: »

I think I can reasonably well

When I saw your name as last commenter how did I know this was coming.....?

Chris75

I have been with Cavendish for a few years and have few complaints but one major problem. The range of funds they offer is that of the Fidelity platform which basically does not include Investment Trusts.


It is up to you to decide if this matters - to me it does.


PS I am inclined to agree with Ryan Futuristics above about short term risk in both Bond & Share markets. I would actually go further and declare doubt about future interest rates, currencies & Central Banks but this is a well rehearsed argument of this forum.

bowlhead99

The question is from someone who is 'dead set on passive', does not want to make a proper selection of funds because he is finding it difficult and would prefer to dive in headlong rather than procrastinate, so is pretty sure the VLS60 will work although plans to buy something else to diversify away from US, is pretty sure he wants ACC and is pretty sure he wants Cavendish.

All one can do in that situation, when faced with someone who does not want to spend more time researching or learning as he has had more than enough of it, is give them some basic comfort that they are on the right lines with ACC as a class and Cavendish as a platform for that size pot, and that the fund choice of 'basic fund of index funds' weighted to the largest companies and countries by value is indeed in line with their philosophy of being dead set on indexing but not wanting to pick individual weights.

In other words, take something out of the box from VLS or its two or three main rivals and you will probably get what you want in terms of meeting those criteria. You may not get the return you hope for, but that comes down to what range of returns you are expecting or will be happy with, and what volatility you are expecting and how well you have chosen.

By giving up on further research and plumping for an out-of-the-box solution that you're most comfortable with out of the ones you've seen so far, you're probably not going to get the absolute highest return for the absolute lowest risk that it's possible to get, but it should do what it says on the tin as the manager doesn't have much discretion.

At the end of the day it's up to the individual to decide if something will meet their needs. If they haven't recreated the historic index numbers to see whether they like what that particular portfolio mix has done over the last 15 years or so, or given consideration to what will happen to individual country stock market indexes, bond indexes and exchange rates over the next couple of decades, then it is not always our job to force opinions down their throat.

So on balance I think one comes across less confrontational and egocentric by saying 'obviously we can't tell if that portfolio mix will meet your needs because we don't know your needs, let alone have a crystal ball', rather than 'I can reasonably well tell you it will not meet your needs'. But I guess some of us like to wave the banner of our own personal investing philosophies a little harder than others

Ryan_Futuristics wrote: »

I can at least say most of that fund is US equities and bonds ... Both currently at some of the worst valuations and poorest yields in over 30 years

There are far more experienced investors and fund managers selling those two broad asset classes right now than buying

Is it not curious that the S&P 500 is up another 5% since Jan 30th then? Surely if more investors were selling than buying it would be going down. Or are do you have a special insight into the fact it is the clever people selling and the dumb people buying?

Not making a straight prediction here

Sure. Keep telling yourself that, and then if your prediction doesn't come true you can say it was only a suggestion, a hint of an idea, that the fund was completely wrong for his needs, rather than your opening gambit that "I think I can reasonably well tell you it is wrong for your needs"

Chris75 wrote: »

PS I am inclined to agree with Ryan Futuristics above about short term risk in both Bond & Share markets. I would actually go further and declare doubt about future interest rates, currencies & Central Banks but this is a well rehearsed argument of this forum.

I too believe there is some short term risk in both of those markets However, as you say it is "a well rehearsed argument of this forum" and so no point rehashing it on every thread!

ChopperST

laughingboy wrote: »

Could you enlighten me which platform you had were thinking with the 18k in mind?
Thanks

Monevator have updated their guidance today. The article suggests £25k is now the cut off for % vs fixed fee.

http://monevator.com/compare-uk-cheapest-online-brokers/