Investment for Dummies

Linton

bostonerimus wrote: »

Another rule I follow is never to buy an fund that invests in an single niche market as they are not as "efficient" as the entire market. This gives opportunities of gains, but also for losses, due to incorrect pricing...

So the only investment of which you would approve is a all cap global tracker, anything else is a subset of the total market? Yet you advocate the VLS funds which are just a fixed % set of single niche market funds.

firestone

Audaxer wrote: »

I think he will have less risk in a low cost multi asset fund like a VLS60 for example that is very unlikely to fall 50% in an equity crash as 40% of it contains bonds. Even if it did have a big fall if he is investing regularly for the next 30 years he will benefit from buying the fund when prices are falling as well as rising. More chance of getting it wrong with a portfolio of active funds in my opinion.

Funny but outside of my company pension where i use trackers due to the choices offered i also pay monthly in a few trackers.There is a chance of getting it wrong in going active but you could also have picked right with a Fundsmith or Scottish Mortgage or a hot Bio tech fund but yes they could all crash so part of the fun i guess.But it just seems more & more that trackers are pushed as almost a win-win product (and i don't mean on here)Also while good for fees the L&G & HSBC multi asset funds that are popular are active funds albeit with the manger working to guide lines

Linton

firestone wrote: »

yes lots of people pay for active managers who are not proving there worth and there is no guarantee you can pick the right one.So no argument there and of course all investing comes with risk.But in saying a beginner who has no knowledge(and who really should learn before investing) will be in less of risk in a tracker when the market could drop 20% or 50% or more and we stay in a recession for a few years may come as a shock to the newbie especially if the tracker does not get back to its previous high

The important lesson to learn is to invest wifely. The easiest way for an inexperienced investor to do this is to buy a single multi asset fund which does the job for for you. To meet that requirement the multi asset fund may or may not be passive. It is a very large and unjustified leap in the argument to say that the only sensible way to invest for anyone is to use a market cap weighted global index tracker.

One could equally well choose the wrong passive fund - look at FTSE100 trackers.

firestone

but most newspaper money pages & websites etc do pick the global tracker as a starting point

firestone

Linton wrote: »

The important lesson to learn is to invest wifely. The easiest way for an inexperienced investor to do this is to buy a single multi asset fund which does the job for for you. To meet that requirement the multi asset fund may or may not be passive. It is a very large and unjustified leap in the argument to say that the only sensible way to invest for anyone is to use a market cap weighted global index tracker.

One could equally well choose the wrong passive fund - look at FTSE100 trackers.

hopefully to invest wifely is a Freudian slip

bostonerimus

Linton wrote: »

So the only investment of which you would approve is a all cap global tracker, anything else is a subset of the total market? Yet you advocate the VLS funds which are just a fixed % set of single niche market funds.

VLS is ok in as much as it gives you a wide range of investments. I don't particularly like the asset mix, but not enough to say don't buy it. My preference is for broad cap weighted indexes and that's how I invest and would recommend that others do that too, but one of the global multi-asset funds will be ok too.

TBC15

Linton wrote: »

One could equally well choose the wrong passive fund - look at FTSE100 trackers.

If memory serves me correctly wasn’t that the no brainer passive choice for motley fool some time ago?

bostonerimus

Linton wrote: »

The important lesson to learn is to invest wifely. The easiest way for an inexperienced investor to do this is to buy a single multi asset fund which does the job for for you. To meet that requirement the multi asset fund may or may not be passive. It is a very large and unjustified leap in the argument to say that the only sensible way to invest for anyone is to use a market cap weighted global index tracker.

One could equally well choose the wrong passive fund - look at FTSE100 trackers.

FTSE 100 is a niche market...ok as part of a larger portfolio if you want to take the time to build one, but not on it's own.

LHW99

If you have a company pension, do you know what it is (DB or DC) and if DC what it invests in? Because even if its a company DC pension you will be invesed in something - maybe the default fund if you didn't actively choose something else.
That may be the place to start learning. Find out what the pension is, how much goes in (from you and the company) how much extra could you get going in (if you add a bit more, does the company do that too?). What is it invested in, could you change that, add a second fund? When is the normal retirement age - does it match SPA?

Big_Dogg

And Warren Buffett..