Beginner question about index funds

isalore

bowlhead99 wrote: »

A bespoke portfolio means something personalised to your needs and preferences at quite a detailed level, rather than just buying an "off the shelf" fund which gives you a general mix of investments targeted to a rough level of risk or performance.

IMHO, if you're building a detailed portfolio for yourself out of lots of different building blocks (individual index funds or active funds), but starting from nothing, you probably need to be investing at least £2k a month. That would be £24k a year, meaning that if the smallest building block within your overall portfolio was ~4%, it would be £1000 of the £24000; or half of one month's contribution per year. I suppose you could do it as a quarter of a months contribution twice a year. Any smaller than £2k a month, the individual components are awkwardly small to waste your time and transaction costs worrying about.

When you're splitting your monthly investments into small pieces, you may incur higher transactions costs and more complexity than you need, especially as you try to rebalance from year to year as the ratios of your holdings change with the markets. it's probably easier to have fewer funds; allow the fund manager to control the ratios of the different assets instead of trying to build it for yourself.

Wow, thanks alot for all the info! What I was thinking was to invest longterm, say about 35 years. I thought by putting a small amount of money each month into index funds with low fees would compound my way up high longterm for a high reward? This is the info I got from different sites, but I probably misunderstood the concept of it? Using the compound interest calculator it shows that I would earn $377,835 of total interest with annual interest rate of 8% by depositing $200 monthly for 35 years. I´m from Sweden so I´m using Avanza to buy funds etc.

Alistair31

isalore wrote: »

How do you mean exactly? Like sticking with one fund or multi-asset fund? Thank you!

Yes. See post #7