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passive investing

edited 30 November -1 at 1:00AM in Savings & Investments
109 replies 11.7K views
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  • edited 23 December 2018 at 8:33AM
    AlexlandAlexland Forumite
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    edited 23 December 2018 at 8:33AM
    bradqwer wrote: »
    ideally id not want to lose more than 25% but i plan to hold this for at least 10-15 years when I will be 50ish and them start moving it into more bonds vs Equity

    In which case its worth considering the Vanguard LifeStrategy 60 fund. The 80 and 100 funds have a realistic potential to drop more than 25% in a proper market crash. Although given the market is already around 10% to 15% down you might want to go VLS80 with at least some of the money? Still if you don't want to worry about tactically tweaking allocations then maybe just VLS60.

    VLS uses both passive index funds (with a slight home allocation bias) and some currency hedging on the bonds to reduce the impact of foreign exchange rate movements. The fund management fee is 0.22% and Vanguard also incurs some investment costs.

    Vanguard S&S ISAs have no trade fees and an ongoing platform fee of 0.15% but if you are contributing regularly their minimum is £100 per month. For £50 per month consider a Cavendish S&S ISA at 0.25% or for as little as £25 per month consider Hargreaves Lansdown at 0.45%. Both would give you access to most of the Vanguard funds available to UK investors.

    Alex
  • Alexland wrote: »
    In which case its worth considering the Vanguard LifeStrategy 60 fund. The 80 and 100 funds have a realistic potential to drop more than 25% in a proper market crash. Although given the market is already around 10% to 15% down you might want to go VLS80 with at least some of the money? Still if you don't want to worry about tactically tweaking allocations then maybe just VLS60.

    VLS uses both passive index funds (with a slight home allocation bias) and some currency hedging on the bonds to reduce the impact of foreign exchange rate movements. The fund management fee is 0.22% and Vanguard also incurs some investment costs.

    Vanguard S&S ISAs have no trade fees and an ongoing platform fee of 0.15% but if you are contributing regularly their minimum is £100 per month. For £50 per month consider a Cavendish S&S ISA at 0.25% or for as little as £25 per month consider Hargreaves Lansdown at 0.45%. Both would give you access to most of the Vanguard funds available to UK investors.

    Alex

    Cheers Alex I do have a account with Hargreves so that sounds like a good place to start tho if i can up my contribution I could save on the fees but whilst the fund is small its not gunna really matter that much right .22% vs .45%
    'Save £1,100 in 2019' #81

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  • OldMusicGuyOldMusicGuy Forumite
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    I found that the Vanguard website had some great descriptions of the different risk levels associated with its Lifestrategy funds, as well as some good analysis of the past performance. That helped me make the choice of fund that I felt was right for my objectives.

    If you haven't done so already, it's worth checking out the funds that are also popular for low cost passive DIY-ing such as HSBC Global and Blackrock.
  • A_TA_T Forumite
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    more scratch cards
  • A_TA_T Forumite
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    bradqwer wrote: »
    Cheers Alex I do have a account with Hargreves so that sounds like a good place to start tho if i can up my contribution I could save on the fees but whilst the fund is small its not gunna really matter that much right .22% vs .45%

    The higher costs with HL can be mitigated to some extent by using discounted funds e.g L&G International, the Lindsell Train funds.

    Also with Cavendish I believe the minimum ad-hoc lump-sump cash investment is £500 but with HL you can deposit any amount of cash no matter how small.
  • SystemSystem
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    bradqwer wrote: »
    Sorry I thought I had replied to your previous response.

    Currently I am working with family, I have money saved aside for crisis situations and I pay into a private pension that SHOULD give me a desirable income if i ever reach that age.

    What I'm looking for is some form of fund that I dont have to spend hours looking at breakdowns etc and worry about it having the right % of eq versus bonds etc etc

    Just something I can chuck my money at on a monthly basis, that has a decent risk vs reward that I can look at every six months and hopefully see some growth no matter how small.

    As fool hardy as it sounds the money wouldnt be missed and would be long term so a high risk with good upside would be interesting.

    NOT saying I would want it to go tits up but hopefully you get the gist of my approach

    For simplicity,

    Go to vanguard.co.uk, open up a Stocks & Shares ISA, pick one of the Vanguard Lifestrategy Funds with a mix of equity (shares) and bonds suitable to your risk tolerance, set up direct debit to fund monthly and then leave it to do its thing. VLS80 might be a good start, migrating to VLS60 as you get towards your 50's.

    At the moment the market is taking a bit of a hit so you need to be prepared for some of your money to lose value over the coming year as its a bit up and down at the moment but as the last recession showed, it'll regain it again even if it tanks 50%.
  • AlexlandAlexland Forumite
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    bradqwer wrote: »
    Cheers Alex I do have a account with Hargreves so that sounds like a good place to start tho if i can up my contribution I could save on the fees but whilst the fund is small its not gunna really matter that much right .22% vs .45%

    The VLS fund management fee is 0.22% - the platform costs are 0.15% for Vanguard Investor versus 0.45% for HL so a 0.30% difference - doesn't sound much but if you do the maths then over the years this difference really adds up.

    I suggest you go for the cheapest platform that has the investment fund you want and will accept your rate of regular contributions.
    A_T wrote: »
    The higher costs with HL can be mitigated to some extent by using discounted funds e.g L&G International, the Lindsell Train funds.

    Problem is these are 100% equities funds and the OP is looking for a more balanced risk fund. Even the discounted Blackrock Consensus 85 is too high risk for what the OP is looking for.

    Bradqwer, out of interest what product(s) do you already have with HL?

    Alex
  • dunstonhdunstonh Forumite
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    bradqwer wrote: »
    Would I fund like the vanguard series be ideal?

    They have some good trackers but they are not the best in all sectors.

    In reality, using trackers for a relatively small amount is pointless. A multi-asset fund would be better (and you can get multi-asset funds with underlying passives in it). Vanguard do some of these although they are no longer the best option in some risk profiles. Although perfectly acceptable.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • dqnetdqnet Forumite
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    dunstonh wrote: »
    They have some good trackers but they are not the best in all sectors.

    In reality, using trackers for a relatively small amount is pointless. A multi-asset fund would be better (and you can get multi-asset funds with underlying passives in it).


    Just out of interest, why is using trackers for small amounts pointless? Not everyone has 50k+ to put into a tracker from day one and rely on drip feeding, would ETF trackers not be appropriate for this?
  • bostonerimusbostonerimus Forumite
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    A multi-asset fund gives you immediate diversity whereas a single sector tracker does not. However, with 3 or 4 trackers you can get a broad cap weighted portfolio that will see you ok.
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