Investing guides- reading suggestions

bowlhead99

BLB53 wrote: »

Personally, I like the Vanguard Lifestrategy funds combining equities and bonds - very simple and good returns. My LS60 fund has averaged 8% per year over the past 5 years since launch.

Although the figures are indisputable and I wouldn't criticise your choice of portfolio, it's probably not a representative return that you can extrapolate going forward of course.

For example, without the devaluation of sterling from the Brexit vote within the last couple of weeks, which positively impacted the GBP value of the 70% of the fund whose assets and profits are denominated in foreign currencies, you would be looking at under 7% a year instead of the 8% you suddenly find yourself with.

And if the 40% of the fund that's linked to the bond market had not benefited from government bond yields falling through the floor and bond prices pushing up to the highest point in all recorded history in UK, USA and Germany (just to name a few countries) this year, you would likewise not be looking at such a tasty return.

Basically, one would struggle to see how you could get 8% for the next half decade from such a fund, unless sterling weakens significantly further - in which case the somewhat specialist holdings that racey wants to buy, would probably serve as a reasonable safe haven.

The gold and us treasuries that he wants now cost much more than they did a fortnight ago, but could keep going up in sterling terms if our economy gets trashed. His selections are a bit of a one way bet on equity market weakness and ongoing or worsening UK currency weakness.

racey

mgarl10024 - good point about percentage, as opposed to fixed, fee.
Is the platform fee either a percentage fee of your holdings or a fixed annual fee?
Is "dealing" a charge on each transaction?
As you can see, I'm on a steep learning curve here.

bowlhead99

mgarl10024 wrote: »

Brokers tend to charge either on a percentage basis (based on the amount invested) or on a flat fee basis (regardless of the amount invested). If you are only investing a little then a percentage based broker (Halifax is flat fee) may be better.
Your activity (how often you trade(buy/sell)) will affect this, so be sure to factor that into your calculations too.

True, these are key considerations: price per trade, and price for generally running the account whether or not you have any trades, are the key points.

However, if the OP is fixed on buying those two particular ETFs though, there's no major percentage-based broker which would offer any real savings over someone like a Halifax - because for buying ETFs on an exchange, a commission-based broker is pretty likely to be a percentage of deal size "...subject to a minimum of..." and is not going to end up at sub ten quid for a buy or a sell. Beyond the fees for the actual trades, ongoing account maintenance fees can be £nil with some brokers if you have some minimum account value or are paying for a minimum number of trades a year.

Either way, worth using a broker or platform comparison tool once he knows exactly how much, of what, he definitely wants to buy.

BLB53

..it's probably not a representative return that you can extrapolate going forward of course.

Agreed. When I purchased, I was hoping for a return of ~6% or so and the fund has gained 5% just over the past week for the reasons you give. I am expecting a pull back at some point but not sure when or by how much.

I think it is good to have a choice of equity/bond funds which can accomodate the sort of risks each investor feels most comfortable taking and the auto rebalance feature offers a bonus which may be worth up to 0.5% p.a.

Dird

racey wrote: »

Is the platform fee either a percentage fee of your holdings or a fixed annual fee?

% of your holdings calculated daily. Use Cavendish Online. It will be much cheaper starting out. e.g. if you did a lump sum £2000 Today and your fund neither increased/dropped over 12 months you'd pay about £6. A lump sum split over 2 Halifax funds would cost about £25 I think. If you choose to pay monthly instead of in a lump sum then your costs increase at Halifax but decrease at Cavendish as it's 0.03% but you start with less money.

racey wrote: »

Is "dealing" a charge on each transaction?

Yes. 2 funds = 2 charges. Investing monthly = 24 charges per year

racey

Thanks to all of you. I've learnt a lot already.

bigadaj

Dird wrote: »

% of your holdings calculated daily. Use Cavendish Online. It will be much cheaper starting out. e.g. if you did a lump sum £2000 Today and your fund neither increased/dropped over 12 months you'd pay about £6. A lump sum split over 2 Halifax funds would cost about £25 I think. If you choose to pay monthly instead of in a lump sum then your costs increase at Halifax but decrease at Cavendish as it's 0.03% but you start with less money.
Yes. 2 funds = 2 charges. Investing monthly = 24 charges per year

Not sure that fee is correct with cavendish. Isn't it 0.25% through fidelity?

Dird

bigadaj wrote: »

Not sure that fee is correct with cavendish. Isn't it 0.25% through fidelity?

Yeah it is, I got it wrong -_- I had £5 at first then thought it was 0.25% + 0.05% but it's 0.2 + 0.05