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My First Investment Portfolio - Your Thoughts

I have always been sensible with my money.
In a few months I'll turn 23 and I'm now starting to prepare for my far-distant future: retirement.

I hold a graduate job and earn a decent-enough salary. I'm currently waiting for my pension to open so I can start ploughing some cash into it - finally!

But, I've recently jumped into investments and created my first portfolio that I would like to hold for the long-term. Whether or not I will decide to cash in this portfolio come 10-20 years in order to fund property investment(s), or if I'll keep hold of them until I'm in my 50s, who knows.
Either way, I do not foresee myself raiding the portfolio for emergencies, my upcoming house deposit or for anything in-between.


With that background, please let me know what your thoughts are as to my portfolio below:

Fidelity Stocks & Shares ISA
CF Woodford Equity Income Fund C Inc - £1,000
Vanguard LifeStrategy 80% Equity Acc - £1,000
HSBC FTSE 100 Index Fund Acc C - £500


All income generated from the funds are to be automatically reinvested.
I will be contributing £50 a month to all three.

My way of thinking behind my portfolio is that the Woodford Equity Income Fund is in extremely safe hands with one of the nation's best performing fund managers: Neil Woodford.
The Vanguard LifeStrategy fund, however, diversifies my portfolio by subjecting it to companies on a global scale, as well as introducing some bonds.
Lastly, the FTSE 100 index tracker is the passive of the bunch, which'll also add another edge to the portfolio. With the FTSE taking a bit of a beating at the moment, I thought now might be a decent-enough time to buy in (shame on me for trying to time the market, I know). Not only that, but surely over the long period of time I am wanting to hold the portfolio, the FTSE is going to steadily increase to new heights(?).

What do you think? Be as positive or negative as you wish, I only ask that you be constructive.
Thank you in advance for your thoughts!
'Ello!
«13

Comments

  • Credit-Crunched
    Credit-Crunched Posts: 2,212 Forumite
    ConnorH wrote: »
    I have always been sensible with my money.
    In a few months I'll turn 23 and I'm now starting to prepare for my far-distant future: retirement.

    I hold a graduate job and earn a decent-enough salary. I'm currently waiting for my pension to open so I can start ploughing some cash into it - finally!

    But, I've recently jumped into investments and created my first portfolio that I would like to hold for the long-term. Whether or not I will decide to cash in this portfolio come 10-20 years in order to fund property investment(s), or if I'll keep hold of them until I'm in my 50s, who knows.
    Either way, I do not foresee myself raiding the portfolio for emergencies, my upcoming house deposit or for anything in-between.


    With that background, please let me know what your thoughts are as to my portfolio below:

    Fidelity Stocks & Shares ISA
    CF Woodford Equity Income Fund C Inc - £1,000
    Vanguard LifeStrategy 80% Equity Acc - £1,000
    HSBC FTSE 100 Index Fund Acc C - £500


    All income generated from the funds are to be automatically reinvested.
    I will be contributing £50 a month to all three.

    My way of thinking behind my portfolio is that the Woodford Equity Income Fund is in extremely safe hands with one of the nation's best performing fund managers: Neil Woodford.
    The Vanguard LifeStrategy fund, however, diversifies my portfolio by subjecting it to companies on a global scale, as well as introducing some bonds.
    Lastly, the FTSE 100 index tracker is the passive of the bunch, which'll also add another edge to the portfolio. With the FTSE taking a bit of a beating at the moment, I thought now might be a decent-enough time to buy in (shame on me for trying to time the market, I know). Not only that, but surely over the long period of time I am wanting to hold the portfolio, the FTSE is going to steadily increase to new heights(?).

    What do you think? Be as positive or negative as you wish, I only ask that you be constructive.
    Thank you in advance for your thoughts!

    Personally, with those sums of money, I would stick to passive tracker funds, these can be run as little as 10 basis points.

    You can look to becoming more adventurous more when you have a larger fund, or maybe within your pension fund.

    Just my opinion mind.
  • dunstonh
    dunstonh Posts: 120,146 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    edited 8 July 2015 at 9:32AM
    To be honest, I wouldnt do that mix

    1 - Its a small amount so why overcomplicate it using multi-asset and single sector funds.
    2 - VLS is already UK heavy and you are making it worse with single sector additions.
    3 - What makes you think your management decisions to go UK heavy are better than Vanguards asset allocation?
    4 - Why the FTSE100? Awful index with poor diversification and over 20 years of underperformance.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • colsten
    colsten Posts: 17,597 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    dunstonh wrote: »
    Why the FTSE100?

    Because most people don't know what you and other seasoned investors know, as they aren't being thought anything of value about investing in school.

    OP, there is lots of info on the web, you just need to find the time and energy to find it. And then know how to filter out duff info.

    Here's a starter for you about the FTSE100: http://moneyweek.com/ftse-100-v-ftse-250-why-have-they-diverged-by-so-much/

    It is also worth spending some time reading about on monevator.com
  • Atreyu107
    Atreyu107 Posts: 96 Forumite
    Ninth Anniversary Combo Breaker
    ConnorH wrote: »
    Fidelity Stocks & Shares ISA
    CF Woodford Equity Income Fund C Inc - £1,000
    Vanguard LifeStrategy 80% Equity Acc - £1,000
    HSBC FTSE 100 Index Fund Acc C - £500

    With regards to CF Woodford, use the ACC class, not the INC class- It will mean that the fund manager will reinvest the income automatically and you won't have to pay Fidelity's DRIP charge.

    Also, with the way the market it is at the moment, and given your age (I am of a similar age and have reasonable amount of experience), I'd focus on growth rather than income-producing stocks, or funds that invest as such, especially if retirement is your objective.

    A well managed growth portfolio will outperform a reinvested-income portfolio over the long term. Remember you can always 'de-risk' when you come closer to retirement (this is how the big pensions funds operate).

    And most importantly, make sure this is within a tax-efficient wrapper like an ISA or a SIPP.
  • AndyT678
    AndyT678 Posts: 757 Forumite
    Part of the Furniture Combo Breaker
    I agree with the previous comments on allocation. You're very UK FTSE 100 heavy with your choice at the moment.

    If it were my decision I'd keep it simple and start with a single multi asset fund like Lifestrategy or one of the L&G ones and let them worry about asset allocation.
  • Can't really add to the advice above but wish to congratulate you on starting out on what will hopefully be a rewarding adventure at an early-ish age. I just wish I could get my Son to start...
    Solar PV cost £5760 (15/03/13)
    FIT inc + Electricity saved £3746 (65% Paid back) Tax free
    Last update 30/09/17
  • Smithy101
    Smithy101 Posts: 37 Forumite
    edited 11 July 2015 at 11:02AM
    First of all congratulation on being so sensible ConnorH . I wish I was when I was your age, which was over a decade ago.

    Have you considered Investment Trusts? They are the original type of investment fund dating back to the Victorian era, but forget the history, I mention them because all the independent analysis states that they perform better that the Unit Trusts/OEICs you have suggested.

    They are managed by a fund manager but have an independent board that represents your interest rather than the fund manager.

    Here is a link to an article showing how the average trust beat the average fund in the same sector over the short and long term: http://whichinvestmenttrust.com/investment-trusts-continue-trounce-competition-celebrate-record-year/

    What I'd suggest you look at as a young man is a very highly regarded Growth trust that you can buy very cheaply for you £50 per month. Scottish Mortgage is a very old investment trust with a fantastic track record.
    Over 1 year it's up 22.9%, 3yrs 99.3%, 5yrs 144.8% 10yrs 310.8%

    You can invest in a monthly savings plan with NO fees (except for Government Stamp duty at 0.50%) plus the trust has a very low management fee of only 0.30% pa Not as low as a tracker but very low for the performance. See stats on AIC website here.

    Scottish Mortgage invests globally with around 40% in technology, the manager's speciality. It's had the same manager since 2000.

    Link to the saving plan with the fund manager Baillie Gifford here.

    Whatever you decide to do, good luck pal!
  • cloud_dog
    cloud_dog Posts: 6,357 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    ConnorH wrote: »

    Fidelity Stocks & Shares ISA
    CF Woodford Equity Income Fund C Inc - £1,000
    Vanguard LifeStrategy 80% Equity Acc - £1,000
    HSBC FTSE 100 Index Fund Acc C - £500
    OP, were you aware that, according to this report a few years ago, 77% of the FTSE100 revenue was generated overseas, and that according to that report and [URL="file:///C:/Users/Mark/Downloads/YourBarclaysBrochure.pdf"]this more recent Barclay's[/URL] one the FTSE100 has a 30% weighting in Emerging Markets.
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • cloud_dog
    cloud_dog Posts: 6,357 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Smithy101 wrote: »
    Have you considered Investment Trusts?
    Hi Simthy, I'm a fan of I.T.s but I think the general consensus is that they may not be the best vehicle for the novice investor due to understanding the premium / discount, and also the effect gearing can have to magnify both gains and losses.
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • Smithy101
    Smithy101 Posts: 37 Forumite
    edited 11 July 2015 at 2:06PM
    cloud_dog wrote: »
    Hi Simthy, I'm a fan of I.T.s but I think the general consensus is that they may not be the best vehicle for the novice investor due to understanding the premium / discount, and also the effect gearing can have to magnify both gains and losses.

    He doesn't have to worry about discounts/premiums and neither do most investors because they iron themselves out in the long run, and especially so if you are saving regularly because you are buying high and low, it's called pound-cost-averaging.

    Also, although you can't see it, unit trust's OEICs have the discount/premium problem too. When you buy units in them they need to go in to the stock market and buy shares which depending on when you invest will be on a premium or discount to the Book value which is equivalent to NAV.

    Short term fluctuations are only a concern for traders NOT for investors.
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