Investment Advice

Tony12345

I was simply suggesting a fund of course there are others like cf Woodford income focus its not about putting all your money in one fund but to recommend a fund was simply what I wanted to do and one with a high yield

There are many funds out there I choose to invest in funds with companies or bonds held that I no about risking my money on things I actually understand

You could over complete stuff and it's why people never no what to do.

Tony12345

bowlhead99 wrote: »

By "OP" I assume you don't mean it in the traditional sense of the original poster of the thread "villieb", but Tony12345?

I agree I wouldn't take Tony's advice - he's not much of an investing expert

TrustyOven wrote: »

Ooops! Sorry. Yes, I meant Tony12345.
I'll edit my post now.

Just so you read my comment
I was simply suggesting a fund of course there are others like cf Woodford income focus its not about putting all your money in one fund but to recommend a fund was simply what I wanted to do and one with a high yield

There are many funds out there I choose to invest in funds with companies or bonds held that I no about risking my money on things I actually understand

You could over complete stuff and it's why people never no what to do.

bigadaj

Tony12345 wrote: »

Just so you read my comment
I was simply suggesting a fund of course there are others like cf Woodford income focus its not about putting all your money in one fund but to recommend a fund was simply what I wanted to do and one with a high yield

There are many funds out there I choose to invest in funds with companies or bonds held that I no about risking my money on things I actually understand

You could over complete stuff and it's why people never no what to do.

Your response suggest that you don't know a huge amount about investing.

Nothing on these boards is advice as that is a regulated activity, but people,can suggest options and what you suggest is poor.

This is just a general comment on what you've suggested, why have you suggested those specific funds, there are many other and probably better options out there.

Even if what you suggest were good for you then everyone's needs and situation is different, and what others have suggested is far more likely to be more appropriate.

There's no problem with learning in these boards but suggesting a single focused narrow actor fund for an OP with a general investing question and holding that on an expensive but user friendly platform isn't very helpful.

villieb

thanks for all (most) the replies

1) The reasons why I'm thinking of funds is for my future children (I don't have any yet) - i.e. when they need it if they go university etc... very long term goals!

2) That's a very good point I wouldn't buy thousands of tesco shares so why would I advise her of that! My mum retires in about 6/7 years time (she has got a pension with Tesco) and I thought I'd try and help her save a little more (and yes that's all she has...).

These shares have been built up through dividends over the the years - various Save as you Earn schemes etc... (and received share certificates)

I think I'm going to have to find a Financial Adviser to find the most tax efficient way to sell these.

I'll find check out Snowman's spreadsheet - I hope it's up to date

Thanks All!!!

Alexland

Hi

Well if you are investing for unborn children with withdrawal starting at age 18 then perhaps Vanguard Target Retirement 2035 or 2040 might be better for you than Life Strategy. These funds are also available on the Vanguard Investor direct ISA platform.

VTR funds invest in the same diversified stocks and bonds as VLS but will manage the volatility down as you approach the withdrawal date (normally retirement to buy an annuity but in your case at age 18+). This is particularly important in the last 10 to 20 years before withdrawal as you want to limit the impact of withdrawal during market crashes (although it would still have an impact).

https://www.vanguardinvestor.co.uk/investing-explained/what-are-target-retirement-funds

The fund costs an extra 0.02% (0.24% rather than 0.22%) but it saves you the hassle of having to keep selling higher risk VLS fund units and buying lower risk VLS fund units to follow the profile.

Although the Vanguard ISA has no trading costs manually derisking would be hassle, you might not do it as effectively and you would have more time with units out of market.

Alex

Eco_Miser

villieb wrote: »

I think I'm going to have to find a Financial Adviser to find the most tax efficient way to sell these.

Not really.
The tax you face on selling shares is Capital gains Tax (CGT). This is calculated on the gain between the cost of acquisition and the proceeds of disposal, but the first £11300 of gains is tax-free. That's total gains on houses, valuable paintings etc. as well as shares.
So if you only sell enough to keep the gain below £11,300 each year there's no tax to pay.

However employee share incentive schemes may be exempt from tax anyway, see https://www.gov.uk/tax-employee-share-schemes

villieb

That's a good point. Where i was reading, I sounded like that limit was part of your overall income.

Good news

Thanks Eco Miser!

villieb

Alexland wrote: »

Although the Vanguard ISA has no trading costs manually derisking would be hassle, you might not do it as effectively and you would have more time with units out of market.

Can you explain this please?

Alexland

Ok so the VLS funds are available with 20%, 40%, 60%, 80% or 100% equity (shares) allocation and the remainder is mostly bonds.

As you can see on the graph on the earlier Vanguard link a VTR fund gradually reduces the equity exposure from over 80% down to around 50% over the circa 25 years leading up to the withdrawal date. So a movement of over 1% each year into bonds. Then if you still have not withdrawn at target date it will reduce down over the next 7 years to 30%.

Equities are generally twice as inversely volatile as bonds. So in a day equities go up 0.5% bonds might go down 0.25% this would be a good day for the markets. On a day equities go down 1% then bonds might go up 0.5% as traders move to perceived safety.

In the long term the drift on both is upwards (although bonds, and to a lesser extent equities, might have some medium term issues if interest rates rise and they will both be equally affected if the pound strengths) but equities have historicly returned twice as much.

By holding a fixed or gradually moving target value allocation over time it causes rebalancing between asset classes the fund makes a small gain as it buys low and sells high.

So in your case with say 20 years to go before your unborn children need the money for say 3 years at uni you could either buy a VTR fund or buy 2x VLS funds to try and manually manage the risk down from around 75% equities to 50% equities (if you agree with Vanguards risk reduction logic and profile).

For example to start you might split your money 75% VLS80 and 25% VLS60 to create your own 'VLS75' and then each 3, 6 or 12 months sell a bit of VLS80 and buy a bit of VLS60 until you are entirely VLS60 when you would start buying VLS40 units until you are 50:50 so are holding your own "VLS50'.

It's fiddly and you would have to wait a few days to sell and then buy the small number of units you are moving each time. Those days you are out the market on those units and on average missing out on tiny gains.

So as I said there is nothing stopping you doing this VLS method (some platforms charge £s to trade but Vanguard don't) but for a tiny bit more money Vanguard will do this risk reduction for you if you buy a VTR fund.

Hope this helps
Alex

Note - VTR works towards around 50% because it is assuming a lump sum withdrawal such as buying an annuity, house or paying for university over 3 years. It is probably not appropriate for those going into long term drawdown as they can afford to take a bit more risk perhaps an extra 10% as some of the money might still be invested 20+ years after the draw down commences. Such an investor could always use a VTR fund with a date 10 years later than they intend to retire.

wsneddon

Invest in property - buy wisely - or find a property investor who has deals you can get into! That's what I do. Be in it for the long term, it works.