Investments for beginner, what fund to choose and how many?

Kriscane

Hi guys need some advice, please.
Well I wanted to start investing small amount of money every month. I'm 27
Was thinking to go with funds and open my account on cavernish online.
Recently read about Vanguard 80% and in 10 years time would that be medium risk or should
I try with 60 % of shares?
What second or third fund would you recommed was thinking of l&g and choose something from asian market
just to split my invests geografically.
I have lump sum of 2000 pounds,
should I keep it on saving account as emergency or also invest in those funds.
Is three funds enough or should I get more?
If I put £150 a month, was thinking to spend 50 pounds on each fund, can I ask you for advice and opinion,
many thanks

bottleandahalf

£50 in a fund won't really make much difference mate.
As a beginner, think about passive funds - Vanguard etc.
Have a look at this blog, will give you an insight to getting started in funds. Ignore the funds from start of blog as there are a lot more diverse funds now than there was in 2011, when blog started.
Good luck.

monevator.com/passive-investing-model-portfolio/

dunstonh

What second or third fund would you recommed was thinking of l&g and choose something from asian market

Why do you want to have multiple funds?
The whole point of using multi-asset funds is that the fund house controls the asset allocation. not you.

Is three funds enough or should I get more?

Personally, I would use one in your case.

can I ask you for advice and opinion,

nothing you see on this board is advice. It is discussion only.

bowlhead99

Kriscane wrote: »

Was thinking to go with funds and open my account on cavernish online.
Recently read about Vanguard 80% and in 10 years time would that be medium risk

80% equities is probably higher than the average risk taken by the average investor.

A 10 year plan, feeding a small amount each month, means the money is only invested for, on average, 5 years. The first pound is invested for 10 years and the last pound is invested for 10 minutes. Traditional advice is that five years is not a long time to hold a high equities investment.

or should
I try with 60 % of shares?

Depends what type of investment you would like. We're all different.

What second or third fund would you recommed

When you are only investing a small amount each month, I wouldn't recommend any second or third funds. Pick one fund which invests across asset classes and geographic regions.

was thinking of l&g

L&G are a fund manager with over 50 different funds to choose from.

They do a multi-index fund which is similar in structure, but different, to the Vanguard LS. There is no point investing in both.

Or they do very specialist funds, for example ones which invest just in one country or in one industry like health or technology or one investing philosophy like 'environmental' or 'ethical'.

and choose something from asian market

Most global multi-asset funds, such as the Vanguard Lifestrategy or L&G Multi-index or any number of actively managed alternatives, include something from the Asian market.

just to split my invests geografically.

Easiest is to simply pick one fund that splits your interests geographically, like the first one you mentioned.

I have lump sum of 2000 pounds,
should I keep it on saving account as emergency or also invest in those funds.

How should we know? Might you need it for an emergency in the next five years or so? Remember that the purpose of an emergency fund is to cover things that are emergencies or unexpected. Presumably, there are other things you want to buy or save for which are not emergencies or unexpected. So, save up money for those things separately from your emergency fund. Then invest the money that's truly 'spare' on top of that. If the £2000 is all you have, it probably isn't really spare.

A good rule of thumb for an emergency fund is to have saved several months' usual expenses, in cash, before you commit money into an investment portfolio which can drop in value significantly (40% loss in a few months is quite possible if you are using a fund which is high in equities).

Is three funds enough or should I get more?
If I put £150 a month, was thinking to spend 50 pounds on each fund,

Three funds is more than enough. Most would think, too many. If you start from £0 you will be at £1800 at the end of the year. On average in this first year, you'll have £900. On that sum of money, three funds is well overcomplicating it. Even at £9000 it would be. At £90,000, sure, get more funds.

can I ask you for advice and opinion,
many thanks

1) Search this forum for the tens of threads in the last six months from people in similar positions to you, and read the advice there. The replies on portfolio construction for a beginner with £100-£200 a month don't really change from three days ago to three weeks ago to three months ago to three years ago.

2) If you work on improving your spelling and grammar you might be able to improve your career prospects, leading to greater gains in wealth than you could achieve by investment alone.

justme111

My opinion is that this post deserves to be placed as a sticky as questions like these are constantly asked but rarely replied as thoroughly

Maelwys

Kriscane wrote: »

can I ask you for advice and opinion,
many thanks

A bit of context:

(i) How much money do you need as a buffer to feel safe were you to lose your job tomorrow? This would need to provide for housing, food, etc. for yourself and any dependants until you found yourself a new job.

(ii) How much "spare" money are you left with at the end of every month?


First work out (i). This is usually going to be 3-6 months worth of take-home pay. Save that much and keep it in a Bank Account where you can get at it when you need it. My suggestion is to go for a current account that earns decent interest.

Now once you have your buffer in place, start looking at (ii). This is the amount you can use for savings. And those savings can go into nearly anything - beit a Cash ISA, a S&S ISA, a SIPP, a Savings account, a Current Account, Invested in P2P, Wrapped up in Property, hidden under your mattress... etc, etc.

Where you keep your savings will depend heavily on what you want to use it for and how much risk you're prepared to take. If you don't mind it being locked away for 20+ years until you want to use it for a pension, investing it in equity-heavy funds is a good bet. But if it's only going to be there for a few months/years until you want a new car, then something with much less volatility would be far more sensible - that might mean investing it in bond-heavy funds, or just keeping it somewhere as cash.

Check out this and this to get you started on asset allocation.

[Note: PERSONALLY I'm using 110-minus-my-age as my rule of thumb for my Equities/Bonds split. But I'm in my early-30s and am fairly employable with enough of a cash buffer to hold me over for 6 months and a Defined Benefit Pension Scheme to fall back on, and I don't really care if the stock market takes a nosedive tomorrow. What holds true for one person doesn't necessarily hold true for another!]

dunstonh

[Note: PERSONALLY I'm using 110-minus-my-age as my rule of thumb for my Equities/Bonds split. But I'm in my early-30s and am fairly employable with enough of a cash buffer to hold me over for 6 months and a Defined Benefit Pension Scheme to fall back on, and I don't really care if the stock market takes a nosedive tomorrow. What holds true for one person doesn't necessarily hold true for another!]

I know exactly where you are coming from there and my response isnt really aimed at you but just a generic remark for the benefit of low experience investors.....

using rough guides based on age/timescale takes no account of capacity for loss or behavioural risk.

Capacity for loss is effectively your ability to absorb losses. i.e. can you afford to take that risk.

Behavioural risk is how you would react in a loss event. For example, its easy to say you wont take money out if it goes down but when that risk event actually happens and you see your value drop for real then it can be a lot harder for some people to hold their nerve. Anybody who tells you that they lost money on the stockmarket and would never do it again is someone that a) invested above their risk profile and b) invested without understanding.

Pinkypants

bowlhead99 wrote: »

2) If you work on improving your spelling and grammar you might be able to improve your career prospects, leading to greater gains in wealth than you could achieve by investment alone.

Ouch, I'm sure Richard Branson would agree with you.

justme111

Pinkypants wrote: »

Ouch, I'm sure Richard Branson would agree with you.

I am sure he will. Bowlhead does not say improving employment and gramma is the only way to wealth , just one of them. I guess original poster is already too old to become football superstar which is another way . Suppose not too late to earn mega money being entrepreneur or alternatively could charm Branson's daughter if he has any and marry into rich family - there are many ways indeed.