Need a nudge to take the plunge

masonic

noggin1980 wrote: »

Posting charts on cyclically adjusted cape (whatever that is) in a newbie thread though doesn't educate it confuses to the point of pushing people away.

What Ryan doesn't seem to fully appreciate is that, for someone just starting out and without a large sum invested, it doesn't really matter if they have the optimal portfolio to benefit from whatever economic events have been prophesised by the soothsayers, but instead should focus on an investment philosophy that they understand and will stick with. If a market crash comes along in a year or two, that might actually be a good thing - I started investing a couple of years before the credit crunch and after some inevitable trepidation seized the opportunity to fill my boots at cheap prices and the money I had invested at the market peak seems insignificant now. You can always explore techniques to try and preserve your accumulated wealth from forecasted market downturns later when you have built a fair sized pot, if you believe you can do so.

bowlhead99

Ryan_Futuristics wrote: »

Well you can lead a horse to water ...

I imagine this is how teachers in our failing public-funded school system feel :rotfl:

http://explosm.net/comics/1695

masonic

bowlhead99 wrote: »

Poor Buffett only got 43 which is less than 10% of your posts so he's probably feeling a little left out

You think that's bad? Shiller only got 5!

noggin1980

Ryan_Futuristics wrote: »

Well you can lead a horse to water ...

I imagine this is how teachers in our failing public-funded school system feel :rotfl:

You aren't leading the horse to water with those charts, you are throwing it in the Ocean. Instead of it getting a drink, you are scaring it and it won't go near the water again.

I'm happy to learn, I'm happy to be told I'm wrong. Your comments about developing markets are fair and reasonable.

Scaring someone off though and confusing them isn't educating them. I'd already posted that I was suffering with analysis paralysis and wanted help pushing through that.

noggin1980

bowlhead99 wrote: »

That is why some people go for the fixed proportions chosen by somebody else. You didn't like the proportions of USA that you had in the standard VLS 60. So now you have broken it down more into UK vs rest of world, but are still implicitly getting whatever proportion that USA is of the rest of the world-exUK fund. US will be by far the biggest component of that. If you really want to rip everything up and start again you have to use lots more of these specialist individual regional funds and there is no saying that you will do a better job of it than whoever first suggested the first out-of-the-box ratio.

There is nothing 'wrong' with giving up some of the largecap developed stuff to replace with smallcap and emerging (if you want the extra volatility and hopefully long term gains).

And there is nothing 'wrong' with giving up some of the largecap generalist stuff and replacing it with a tilt towards biotech or cleantech or engineering or space. But that tilt will be way more volatile than the rest of your fund (biotech funds for example can go up by 100%+ or down by 80%+ in a year).

You were originally going for 60% equity 40% bonds with the intention of getting the equity up to 70%. In your current draft version if you add some specialist equity fund to round it off you will be up to 80% equity AND everything that is non equity is UK government bonds rather than a nice mix of UK government bonds, international government bonds, UK investment grade corporate bonds, international investment grade corporate bonds, emerging market government bonds, high yield bonds, etc etc etc etc.

So, you have certainly built a different portfolio. Is it any better? That's in the eye of the beholder, and will become only evident with a healthy dose of hindsight. It is certainly a more aggressive portfolio. I would prefer it to what you started with (if you had something more balanced for the bonds). I like the idea of more emerging and more smallcap, although personally prefer active funds for smallcap and emerging . But very importantly you are not building it for me you are building it for you.

On some level, we really don't care what you do with it, as much as you should.
Enjoy!

Thanks very much, my wife is home now though, but tomorrow I'll have another go taking into account your comments.

ChesterDog

I hope I might be forgiven for sticking in a small oar, having not read the entire thread, but gleaned the gist, I think.

Noggin, you look like you will be fine. The most important thing of all in my view is not to start investing by putting a large amount of money into something that is patently bonkers. If that sounds obvious, take a look at some of the threads of wailing on here and you will see that - all too often - it is not.

Second most important thing is to be diversified and at appropriate risk spread and level.

Third is to get on with it.

You look like you will be fine to me.

noggin1980

I think I've decided to stick with the Developed world fund rather than splitting it. Having this is a fair bit less us centric than the lifetracker as that had developed world (which includes US) and then US as well. I don't feel that I can do a better job choosing the mix of countries and the cost savings seem to be very small, so I'm going to stick with the simplicity of one fund.

I've decided to add 5% to the emerging markets and 5% to bonds (and split into 2 different bond funds for diversification and then I think I'm going to go with that. Not worry about adding biotech or anything for now.

So Vanguard FTSE All Share Index Fund Acc (VVFUSI) - 0.08% - 15%
Vanguard FTSE Dvp Wld Ex UK Equity Index Fund Acc (VVDVWE) - 0.15% - 35%
Vanguard Emerging Markets Stock Index Fund GBP Acc (VIEMKT) - 0.27% - 15%
Vanguard Global Small-Cap Index Fund GBP Acc (VIGSCA) - 0.38% - 10%
Vanguard UK Government Bond Index Fund GBP Acc (VIUKGO) - 0.15% - 15%
Vanguard Global Bond Index Fund GBP Acc (VIGBBD) - 0.15% -10%

So 75% equity, a bit of risk but nothing too outlandish and pretty diversified, still reasonably US centric but lessso than the lifetracker and cheaper overall.

I realise they are all Vanguard and maybe I'd be better not doing that, but I was allowing myself this for simplicity especially since they all seem to appear on Monevator cheapest index lists.

So tomorrow I'm going to go for it unless someone gives me a good reason not to.

Thanks for everyones help.

takesyourchances

Without wanting to add further confusion as I know myself getting started is one of the hardest things, but in a passive approach, a core VLS takes a lot of re-balancing work away, especially if new to investing.

While there is various opinions on all approaches, I do hold the VLS as one of my core holdings and have more specific and niche tilts around it with managed funds, Smaller Companies, Emerging Markets, Asia etc.

Maybe a VLS 80% (Or 60%) with tilts of smaller companies, emerging markets or Asia etc might be easier to manage and you could increase with bonds to your preferred ratio.

The VLS appealed to me a couple of years ago for this simplicity reason and being new to investing in the markets and I added tilts as I went a long.

I also started a separate portfolio with Equity Income funds and Investment Trusts as another approach as well and I am happy to carry on with all of these, I am not one for jumping in and out of holdings (I really don't know enough to start to predict like that or market time) and my VLS at present is up 14% from opening.

I am no expert, but can see where I was a couple of years ago when starting out. My timescale is hopefully only ever sell as I would draw down in the future and keep a reasonable cash reserve for short term needs and unforeseen expenses.

Good luck with what you decide, this forum is excellent help to me as well.

TheTracker

noggin1980 wrote: »

I think I've decided to stick with the Developed world fund rather than splitting it. Having this is a fair bit less us centric than the lifetracker as that had developed world (which includes US) and then US as well. I don't feel that I can do a better job choosing the mix of countries and the cost savings seem to be very small, so I'm going to stick with the simplicity of one fund.

I've decided to add 5% to the emerging markets and 5% to bonds (and split into 2 different bond funds for diversification and then I think I'm going to go with that. Not worry about adding biotech or anything for now.

So Vanguard FTSE All Share Index Fund Acc (VVFUSI) - 0.08% - 15%
Vanguard FTSE Dvp Wld Ex UK Equity Index Fund Acc (VVDVWE) - 0.15% - 35%
Vanguard Emerging Markets Stock Index Fund GBP Acc (VIEMKT) - 0.27% - 15%
Vanguard Global Small-Cap Index Fund GBP Acc (VIGSCA) - 0.38% - 10%
Vanguard UK Government Bond Index Fund GBP Acc (VIUKGO) - 0.15% - 15%
Vanguard Global Bond Index Fund GBP Acc (VIGBBD) - 0.15% -10%

So 75% equity, a bit of risk but nothing too outlandish and pretty diversified, still reasonably US centric but lessso than the lifetracker and cheaper overall.

I realise they are all Vanguard and maybe I'd be better not doing that, but I was allowing myself this for simplicity especially since they all seem to appear on Monevator cheapest index lists.

So tomorrow I'm going to go for it unless someone gives me a good reason not to.

Thanks for everyones help.

Looks good to me. A property tracker like blackrock would be the next addition.

noggin1980

TheTracker wrote: »

Looks good to me. A property tracker like blackrock would be the next addition.

Thanks, did you see my post earlier about how we own half of 2 flats and my wifes Dad has 20 flats and an expensive house (half of which will be my wifes inheritance, though I think his plan is to sell them one at a time and gift cash) so Andreas inheritance will be affected by the property market. Does this not mean I should avoid a property tracker?