Good Investment Decision? S&P 500 with Vanguard?

A_T

ESonic wrote: »

Thanks for the advice all.

This is what I have bought so far:

£500.00 - Global Momentum Factor UCITS ETF (VMOM)
£500.00 - Global Small-Cap Index Fund - Accumulation
£500.00 - S&P 500 UCITS ETF (VUSA)

I have £8,500.00 left, I am thinking about investing them after Brexit. I've read an article that after PPI ends, the banks will be able to save a lot of money and pay more dividends. Do you think I should buy some shares in UK banks?

Are you are convinced you know better than the market? Presumably the rest of the investment world has this information about UK banks but their share price isn't soaring in relation to other shares as far as I know.

IanManc

ESonic wrote: »

Thanks for the advice all.

This is what I have bought so far:

£500.00 - Global Momentum Factor UCITS ETF (VMOM)
£500.00 - Global Small-Cap Index Fund - Accumulation
£500.00 - S&P 500 UCITS ETF (VUSA)

I have £8,500.00 left, I am thinking about investing them after Brexit. I've read an article that after PPI ends, the banks will be able to save a lot of money and pay more dividends. Do you think I should buy some shares in UK banks?

No I don't think you should buy shares in UK banks. And I think you should stop being influenced by articles you read in newspapers or you'll be endlessly chopping and changing your investments.

For what it is worth, I think you should stop piddling around with these little £500 semi-random punts and buy a global fund like HSBC FTSE All World or Vanguard FTSE Global All Cap and then leave your investment alone - that's if you invest at all, bearing in mind the five year timescale in your opening post.

masonic

A_T wrote: »

This is true.

For an accurate measure of the total global market USA is currently 54.85% of the FTSE Global All Cap Index.

Not sure if the country weightings of the index are published anywhere, but going by the Vanguard tracker of the same index, it holds 50% in the USA and 3% in Canada, so I wonder if North America has been lumped together in your figure.

I tend to go by the weightings at https://www.starcapital.de/en/research/stock-market-valuation/ which seems to have slightly higher weightings for Germany and other European countries, also Japan and Asian countries. UK is marginally lower and the USA is down at 45%. Not sure which more correctly reflects reality.

Alexland

IanManc wrote: »

For what it is worth, I think you should stop piddling around with these little £500 semi-random punts and buy a global fund like HSBC FTSE All World or Vanguard FTSE Global All Cap and then leave your investment alone.

Sure if it was 20 years and the OP was sure they could control their reaction to seeing heavy losses to avoid an emotional error but for 5 years??

Alex

A_T

masonic wrote: »

Not sure if the country weightings of the index are published anywhere, but going by the Vanguard tracker of the same index, it holds 50% in the USA and 3% in Canada, so I wonder if North America has been lumped together in your figure.

http://www.ftse.com/Analytics/FactSheets/Home/DownloadSingleIssue/GAE?issueName=GEISLMS

masonic

Alexland wrote: »

Sure if it was 20 years and the OP was sure they could control their reaction to seeing heavy losses to avoid an emotional error but for 5 years??

Indeed, perhaps ESonic could comment on how much of a loss they could tolerate within those 5 years. The current portfolio is capable of more than halving in value.

bowlhead99

ESonic wrote: »

I have £8,500.00 left, I am thinking about investing them after Brexit. I've read an article that after PPI ends, the banks will be able to save a lot of money and pay more dividends. Do you think I should buy some shares in UK banks?

No. Everyone in the world has read the same article and performed the same analysis, so they know that banks will not be spending money on PPI claims once the PPI claims stop. It is already built into the price of the shares on the open market (which are priced and re-priced several times a second by supply and demand). People today are buying bank shares knowing that the banks will be free of their PPI exposure after everyone is finished claiming. They build that into their projections of the banks potential profit over the next twenty years, which drives today's price.


If something like Brexit concerns you (and it must, because you are thinking about not investing yet, because of it, even though the full exit after all the transitional arrangements will take years), then you should realise the performance of shares in a UK bank will be highly affected by Brexit. Lloyds for example generally does its business in UK with UK businesses and UK individuals so is heavily linked to whether our economy is in growth or recession, appetite for consumer and business borrowing, interest rates, unemployment etc.



Spending and borrowing and what happens to interest rates in the 'brave new world' after Brexit will have a major effect on UK banks. We already know PPI claims are ending. We don't know what shape Brexit will take and whether it will be a resounding success, failure or somewhere in between. So buying UK banks is a risky proposition.



At the start of this thread you were told investing in an index of US stocks was an unsuitable investment because it only covered one part of the world and you need to be much more diversified in your outlook. Investing in one sector (banks) out of all the different industries available, in one even smaller part of the world (UK), is bonkers when you haven't yet got yourself your diversified fund portfolio in place which gives you exposure to global equities, bonds, commercial real estate etc.


Now you have had your fun with 15% of your money experimenting in specialist funds for your short (5 year) timescale , spend the remaining 85% of your money just buying one fund that holds a mix of equities and bonds around the world. The Vanguard product range that does that is called Lifestrategy. Though 5 years is too short really and you could still lose a few thousand over theat timescale even if you use the lower-risk versions.

IanManc

Alexland wrote: »

Sure if it was 20 years and the OP was sure they could control their reaction to seeing heavy losses to avoid an emotional error but for 5 years??

Alex

You'll see from the time of my amendment of my posting and the time of your comment that I'd changed my posting to cover that point while you were drafting your reply.

badger09

IanManc wrote: »

You'll see from the time of my amendment of my posting and the time of your comment that I'd changed my posting to cover that point while you were drafting your reply.

And your suggestion makes more sense than OP's current random selection;)

AnotherJoe

ESonic wrote: »

Thanks for the advice all.

This is what I have bought so far:

£500.00 - Global Momentum Factor UCITS ETF (VMOM)
£500.00 - Global Small-Cap Index Fund - Accumulation
£500.00 - S&P 500 UCITS ETF (VUSA)

I have £8,500.00 left, I am thinking about investing them after Brexit. I've read an article that after PPI ends, the banks will be able to save a lot of money and pay more dividends. Do you think I should buy some shares in UK banks?

Why ? Whats your rationale?