Confused About Investment Choices

PixieFace

Hi All,

I am looking at starting to invest and have been reading many articles and the threads on the forums for some weeks now and find that I am not making much progress in terms of what I should do; indeed, I find I am more and more confused. I have a good amount in cash savings, a LISA (for retirement saving) which is full to date, and make reasonable contributions to my company pension. I am starting to think that I should begin investing as a way of making my money work harder for me, but I am pretty risk-averse and really don't know where to begin. I have been looking into passive investing using an ISA but this still seems really complex and the more I research, the more I am shying away from the idea and thinking I will continue to save in cash and just accept that I will lose out to inflation. I was thinking of an initial lump sum investment of £1,000 with regular deposits of around £100 a month to begin with, so not sufficient sums to justify the services of an IFA. My initial thought for the ISA is to go with Cavendish due to the small investment amount and their low fees, but I don't know where to even begin with choosing funds or the best approach to using the ISA. I am not averse to the idea of spending a bit of time on managing the ISA, as I already do so to manage bank accounts and savings, but I lack the knowledge and experience to feel comfortable enough to begin. Any advice would be most welcome

ColdIron

You could do worse than to research one of Vanguard's Lifestrategy funds held in an ISA with Vanguard Investor. Other products and vendors are available but this is as simple as it gets on £1,000

NoMore

http://monevator.com/vanguard-lifestrategy/

and there's a good explanation of ColdIron's recommendation

NewShadow

PixieFace wrote: »

Hi All,

I am looking at starting to invest and have been reading many articles and the threads on the forums for some weeks now and find that I am not making much progress in terms of what I should do; indeed, I find I am more and more confused.

Hi Pixie.

I was - and in many ways still am - in the same situation as you are until, really, the start of this FY

I found it very helpful to set a goal - for me, I want enough money to buy a house with a 26% deposit in the next 10 years or so (so I have enough time to pay off the mortgage before I'm 65)

I don't intend to buy the house any time soon, and if I get my finger out and all goes well I can have the cash by this time next year, but it's a goal to work towards.

You have a lisa towards your retirement and are paying into your pension - so is your goal having a specific amount of annual income once you are retired?

Or perhaps, given you can take the LISA from 60, to retire early and have enough assets to provide an income until your work and state pension kick in?

Or are these savings separate from your retirement and you want to take an exotic holiday, or carry out building works, or something else?

I found, once I knew what I wanted to do with the money, it helped me know how much I wanted and that helped me figure out the best way to get there.

But that's just me and you might be different

Zorillo

If your LISA is in cash, but for retirement, you should consider moving it to S&S as soon as possible. It'll be invested for a minimum of 19 years (more if you're younger than 40).

Mine is invested in Vanguard Lifestrategy through AJ Bell who work out cheaper for me as I only make two trades per year (investing the deposit and then the bonus). I'm 35, so 25 years until 'redemption' so it's currently in VLS100 for the next ten years at least, but once it's bigger I'll shift it down the risk levels. As you've said your cautious, you might consider a lower risk version (40 or 60 perhaps, or even 20 until you get a feel for it?).

Alexland

+1 for moving your LISA to S&S as saving in cash is higher risk of losing to inflation over the long term.

TheShape

PixieFace wrote: »

Hi All,I am looking at starting to invest and have been reading many articles and the threads on the forums for some weeks now and find that I am not making much progress in terms of what I should do; indeed, I find I am more and more confused. I have a good amount in cash savings, a LISA (for retirement saving) which is full to date, and make reasonable contributions to my company pension.

If you are making contributions to a pension you should already be investing and if your LISA isn't invested for retirement then, as already mentioned, it should be.

I'd look at where your pension is invested and whether you are receiving as large an employer contribution as you can as well as whether you can use salary sacrifice in your pension.

I think it's worth posting details of these as well as your cash savings, age, aims for the money etc.

You'll often find that if you post a good deal of detail then the people here will pick up on things that you might have overlooked and give some good suggestions.

BLB53

My initial thought for the ISA is to go with Cavendish due to the small investment amount and their low fees, but I don't know where to even begin with choosing funds or the best approach to using the ISA. I am not averse to the idea of spending a bit of time on managing the ISA, as I already do so to manage bank accounts and savings, but I lack the knowledge and experience to feel comfortable enough to begin

It does not need to be complicated. Just go with Vanguard Lifestrategy and select the most appropriate equity/bond ratio to match your level of risk...maybe VLS 40 or 60..and drip feed your monthly contributions for the long term.

Here is good article on DIY Investor who follows this fund
http://diyinvestoruk.blogspot.com/2015/04/vanguard-lifestrategy-one-stop-solution.html

As mentioned above, the Vanguard platform would be the best option if you decide to go with the Lifestrategy as it has the lowest annual charges and there are no transaction charges for each monthly purchase.

PixieFace

Thank you all for your responses. ColdIron, NoMore and BLB53, thank you for suggesting the Vanguard Lifestrategy options, I will have a look at these in more detail, but it looks like a good starting point for me. I think I had not considered this as there are fewer funds available through Vanguard than with other options, although less choice is not always a bad thing!!

My LISA is a cash version at the moment but Zorillo and Alexland you make a valid point regarding the length of the investment. I wasn't even considering the idea of investing when I opened the LISA but will look at transferring this once I am a little more confident with the options.

NewShadow, I don't really have a goal, as such, but I know what you mean. I am mainly looking at this from the perspective of ensuring I have enough for retirement, but with a view of retiring earlier if I can, so I suppose that is the main aim. I am also considering the fact that my retirement savings are tied up until a certain age, so having something else that is accessible sooner, which is tax efficient and providing better growth/income potential than cash savings makes sense. I also have the issue of running out of direct debit options so am restricted on the higher interest current account options. Although I think monthly deposits to a Vanguard LISA may be an additional DD option for me so I can re-visit my current account options too

The Shape, I am happy with my current pension situation, which is salary sacrifice and has a good employer contribution, plus I pay into a previous company pension to retain the really low management fee and giving me an extra monthly direct debit for current accounts paying interest!. I don't really want to pay more into these due to age constraints on withdrawing and the tax implications, hence looking at ISAs.

Alexland

PixieFace wrote: »

My LISA is a cash version at the moment but Zorillo and Alexland you make a valid point regarding the length of the investment. I wasn't even considering the idea of investing when I opened the LISA but will look at transferring this once I am a little more confident with the options.

A 'good enough' low cost mostly passive S&S investment will be better than saving for 20+ years in cash. If you go with HL or AJ Bell YouInvest and invest in one of the low cost global passive funds such as Blackrock Consensus 85 (discounted on HL), Vanguard LifeStrategy 80 or HSBC Global Strategy Dynamic your money should grow nicely - with a few ups and downs along the way. As you get closer to withdrawal at 60 (or later if you won't need the money immediately) you might want to gradually move the money into a more balanced fund.

If you want a smoother ride (for probably lower returns but still likely better than cash) consider Vanguard LifeStrategy 60 or HSBC Global Strategy Balanced funds.

Edit: just remembered HL don't accept inbound LISA transfers so look at AJ Bell YouInvest.

Alex

PixieFace

Thanks Alex, I will look into these.