Fund and broker advice please

havingaball74

Hi all,

I’m hoping for some advice as a new investor. I’ve done lots of reading but am still stuck on a few points going forward.

Some background- I’m a 44 year old teacher, homeowner with mortgage, partner but no children. I have 2 years’ ISA allowances that I would like to invest initially. 20k is in a cash ISA from last year, the other 20k is at present in premium bonds. I’m a mid range risk investor, hoping to retire at 60 but maybe before if I’m lucky.

1. I was going to put 40k into Vanguard Lifestrategy 40 or 60. Then I noticed the Vanguard Target Retirement Funds. I’m now confused as to which would be better to invest in. I like that the Retirement Fund rebalances it for you as you get older and shifts the emphasis from equities into bonds. With VLS would I have to try and do that myself as I get closer to retirement? Which one would people recommend? I’m a novice so would like to invest and then leave.

2. I was planning to go through Vanguard direct but I’ve read that for larger amounts it would be better to go through a fixed fee platform such as iWeb or Halifax Share Dealing rather than the % fee of Vanguard. I don’t know about trading fees etc. I was planning to invest and leave well alone. Which one would be better for me with 40k to invest?

Lastly, 3. I have 20k in an old Cash ISA and the rest in premium bonds. Do I invest the ISA money first as a transfer in one go or this year’s ISA allowance which is currently in premium bonds? Do I do it all in one go or drip feed?

Sorry for so many questions. I have put off investing this money for so long but just as I was about to take the plunge, my reading throws up other options! Thanks in advance for any pearls of financial wisdom.

havingaball74

Also, is HSBC Global Strategy a decent alternative to the Vanguard products? I was looking at the balanced or conservative portfolios.

dunstonh

1. I was going to put 40k into Vanguard Lifestrategy 40 or 60. Then I noticed the Vanguard Target Retirement Funds. I!!!8217;m now confused as to which would be better to invest in. I like that the Retirement Fund rebalances it for you as you get older and shifts the emphasis from equities into bonds. With VLS would I have to try and do that myself as I get closer to retirement? Which one would people recommend? I!!!8217;m a novice so would like to invest and then leave.

The Target return funds are very niche and unlikely to be suitable for most people. They start higher risk than the typical UK consumer and end up lower risk than the typical UK consumer. The risk reduction is on their terms, not yours. You also pay more for that lifestyling.

2. I was planning to go through Vanguard direct but I!!!8217;ve read that for larger amounts it would be better to go through a fixed fee platform such as iWeb or Halifax Share Dealing rather than the % fee of Vanguard. I don!!!8217;t know about trading fees etc. I was planning to invest and leave well alone. Which one would be better for me with 40k to invest?

Personally, I would not use Vanguard even though its cheaper because you are forcing yourself to use one fund house. If you are cautious (VLS40 end) then the risk targetted alternatives may well be better.

Lastly, 3. I have 20k in an old Cash ISA and the rest in premium bonds. Do I invest the ISA money first as a transfer in one go or this year!!!8217;s ISA allowance which is currently in premium bonds? Do I do it all in one go or drip feed?

Statistically, phasing results in lower returns in most periods. But you won't know until the end of the period of phasing which option was best with hindsight.

AnotherJoe

Unless you plan to buy an annuity immediately you retire (very unlikely these days) then the vanguard target retirement fund is somewhat old fashioned because this is what used to happen when it was standard to buy a annuity when you retired. These days you tend to stay invested at your original risk level until much later, and some time into your retirement.
As an example, my last employer switched to a new pension scheme in about 2007 or so and the new pension included this kind of arrangement as a default , shifting people gradually into bonds and cash and so on from age 55. In 2015 they reviewed and changed that policy and began approaching all those affected or who would be affected suggesting they didn't select that arrangement.
I suggest you go for VLS40 or 60 and takea view in ten years time what you think. You can always switch some funds to vls20 if you feel that's a good idea. You will I assume also have have a decent teachers pension to back you up as well ?
As to how to invest it if you are cautious drip feeding will give you a few months buffer so whilst it in reality won't make much difference if it makes you feel better do it.
Edit. Re HSBC I prefer those because I don't like the VLS artificial 25% loading in the U.K. which ends up focussing some investments into a handful of sectors. But I wouldn't get too hung up about it. No harm in splitting 50/50 between the two if you can't make your mind up either, better to get on with it than be paralysed by indecision.

kidmugsy

If you hope to retire early can you explain why you are investing in an S&S ISA rather than a personal pension of some sort?

havingaball74

Thank you so much for your advice. Really appreciated.

I will leave the retirement fund alone then.

Sorry to ask the same question, just to clarify, it is more cost effective on a 40k lump sum to go through Vanguard direct and pay a % fee or iWeb/Halifax that is a fixed fee? I am concerned about fees as the amount invested increases.

If I wanted to lifestyle the VLS later and move towards more bonds at retirement, is that easy to do?

Which would you recommend out of the VLS 40 and 60?
If I also opened a HSBC Global Strategy, is there much difference between the conservative and balanced portfolio?
Do I split the money 50/50?

Lastly, if I opened a VLS and a HSBC portfolio how do I make sure that they are both in the same ISA wrapper? How does it work them being in the same ISA wrapper if I open one through Vanguard and one through HSBC? Is it better to go through a platform such as iWeb or Halifax and them open them together if I do both?

Thanks again.

dunstonh

Which would you recommend out of the VLS 40 and 60?

Neither now as we have stopped using them and use the alternatives. However, if you feel VLS is the only option available to you then you would pick the one that is right for your risk level and capacity for loss.

If I also opened a HSBC Global Strategy, is there much difference between the conservative and balanced portfolio?
Do I split the money 50/50?

Again, risk level.

Lastly, if I opened a VLS and a HSBC portfolio how do I make sure that they are both in the same ISA wrapper?

By using a whole of market platform. Not one tied to just one provider/fund house.

How does it work them being in the same ISA wrapper if I open one through Vanguard and one through HSBC?

If you do that, then you are tied to just one of them. You must use a whole of market platform to access different investments.

Is it better to go through a platform such as iWeb or Halifax and them open them together if I do both?

Using a whole of market platform (most common method) or fund supermarket (less common nowdays) is the only way you can mix and match fund houses.

schiff

dunstonh wrote: »

VL 40 & 60: Neither now as we have stopped using them and use the alternatives.

That's intriguing. What are the alternatives? Pse.

dunstonh

schiff wrote: »

That's intriguing. What are the alternatives? Pse.

The alternatives are frequently mentioned on this site.

Effectively, we use the risk targetted alternatives for the more cautious investors (VLS is not risk targetted and if you are cautious then you are better off being risk targetted).

We are only talking fine tuning decision making though. Its like going into the supermarket and comparing tomatoes.

havingaball74

I thought that VLS was risk targeted by selecting VLS over 80 for example? Is there a better alternative for a moderately cautious novice investor?

Is HSBC Global Strategy a good alternative?

Are iWeb and Halifax whole of market platforms?

Now I am stumped. I thought VLS was a good buy for the novice investor?

havingaball74

I have a good teacher pension set up. I could feasibly retire at 57 but will probably hang on until 60. I would like my investments to supplement my teacher pension.