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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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Replies

  • atushatush Forumite
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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

    Then yes a Multi asset fund like Vanguard would suit you. i would sugget for your age, and for 30 years or so, a high equity one would suit.

    But we have no idea of your capacity for loss, and if you would panic sell in a downturn.
  • IanManc wrote: »
    Here they are. :)

    Thanks will look into that
    'Save £1,100 in 2019' #81

    £50/£1100
  • atush wrote: »
    Then yes a Multi asset fund like Vanguard would suit you. i would sugget for your age, and for 30 years or so, a high equity one would suit.

    But we have no idea of your capacity for loss, and if you would panic sell in a downturn.

    Cheers for the reply I am siding with the VG80 as I'm happy with the simplicity along with the risk/reward potential.

    One question I have just had a read of the LISA which I believe you can invest up to £6k per year this is roughly what Ill try to invest per year but it will be a retirement fund as I doubt my ability to ever purchase a house.

    Is the LISA strictly a cash saving scheme or would i be better served buy wrapping the investments in a S&S Isa as I see the LISA gives u a yearly bonus?
    'Save £1,100 in 2019' #81

    £50/£1100
  • I, for one, value the information that the IFA's, and other more knowledgeable people, write on this board.
    As my username will tell you, I joined MSE not having much of a clue about investing other than seeing other people's money doubling without them doing anything... I came here to learn & get some pointers.

    This site, those people & what they wrote over the last 18months has taught me to understand my risk profile, understand where I've made mistakes & given me pointers to what sort of funds would be suitable for me (out of the 3000+ available) - once I'd gotten over the DIYing badly stage of constantly switching & adding more & more random funds with no rhyme or reason to them other than to feel like I was "investing". It was reading consistent information from the likes of DunstonH & Alex that made me realise what I was messing up, how & why!
    I think every newbie goes through the same journey.

    Fortunately, I learnt fairly early on (or on a couple of occasions got told) that getting fund happy/unhappy on a regular basis is just a recipe for loss - so I've only lost a grand total of £100 from selling funds at a loss when I realized they were outside of my risk tolerance.

    Today my total portfolio, including pensions, LISA,ISA etc are showing a value about £1000 less than I paid for them. But, I've only had them for 2 years or less so to be expected this early on & in light of the bull run. This is now a buying opportunity, a thing I only understand because the IFA's etc on hear didn't give advice, but they did give a free education.
  • bowlhead99bowlhead99 Forumite
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    bradqwer wrote: »
    .

    One question I have just had a read of the LISA which I believe you can invest up to £6k per year this is roughly what Ill try to invest per year but it will be a retirement fund as I doubt my ability to ever purchase a house.
    The limit for what you put in is £4k per year. Each £1 you put in, the government gives you 25p in the account as bonus, so if you put £4k in, the government tops it up by £1k as bonus, and you'll have £5k in the account, before investment growth

    But the catch is, if you're not using it for purchasing a house, you can't take it out without a penalty until you're 60.

    a) that's fine if you're using it for retirement, which could work for many people - but you did say earlier your investment was for a 10-15 yr timescale at which point you'll be only 50 not 60.

    b) if the goal is retirement: if you're a higher rate taxpayer (don't think you said whether you were or not), the bonus of 25% may be less than the "bonus" of tax relief you would get by using a traditional pension. Although a pension is totally locked away until your late 50s, whereas an S&S LISA you could give up the bonus and pay a small penalty to access the money, if it turned out your planning had gone badly wrong.

    Is the LISA strictly a cash saving scheme or would i be better served buy wrapping the investments in a S&S Isa
    A LISA an be either a cash scheme from a bank or building society, or it can be an S&S investment scheme from an investment firm (like Hargreaves Lansdown you mentioned, or AJ Bell Youinvest, other rivals, etc). They both have the same contribution limit of £4k a year (plus the bonus makes £5k).

    If your goal for the money was retirement funding rather than property purchase - to be accessed over the age of 60 - but you're only in your late 30s now: you'd be insane to use a cash version of the LISA scheme instead of an investment version, because the value of a cash deposit would be eroded by inflation over the next couple of decades (whereas the investment version should hold its own and hopefully give inflation-beating returns).
    I see the LISA gives u a yearly bonus
    For clarity, it only gives you the bonus each year you put money in, up to the annual limit (a month or so after you put the money in and the provider claims it for you), but it doesn't give you the bonus *again* on the same money in future years if you're not putting new money in. You just get the 25% once on every pound you contribute.
  • bowlhead99 wrote: »
    The limit for what you put in is £4k per year. Each £1 you put in, the government gives you 25p in the account as bonus, so if you put £4k in, the government tops it up by £1k as bonus, and you'll have £5k in the account, before investment growth

    But the catch is, if you're not using it for purchasing a house, you can't take it out without a penalty until you're 60.

    a) that's fine if you're using it for retirement, which could work for many people - but you did say earlier your investment was for a 10-15 yr timescale at which point you'll be only 50 not 60.

    b) if the goal is retirement: if you're a higher rate taxpayer (don't think you said whether you were or not), the bonus of 25% may be less than the "bonus" of tax relief you would get by using a traditional pension. Although a pension is totally locked away until your late 50s, whereas an S&S LISA you could give up the bonus and pay a small penalty to access the money, if it turned out your planning had gone badly wrong.



    A LISA an be either a cash scheme from a bank or building society, or it can be an S&S investment scheme from an investment firm (like Hargreaves Lansdown you mentioned, or AJ Bell Youinvest, other rivals, etc). They both have the same contribution limit of £4k a year (plus the bonus makes £5k).

    If your goal for the money was retirement funding rather than property purchase - to be accessed over the age of 60 - but you're only in your late 30s now: you'd be insane to use a cash version of the LISA scheme instead of an investment version, because the value of a cash deposit would be eroded by inflation over the next couple of decades (whereas the investment version should hold its own and hopefully give inflation-beating returns).

    For clarity, it only gives you the bonus each year you put money in, up to the annual limit (a month or so after you put the money in and the provider claims it for you), but it doesn't give you the bonus *again* on the same money in future years if you're not putting new money in. You just get the 25% once on every pound you contribute.

    Cheers for this reply very helpful one last question if i wanted to go down the S&S LISA route which is obv the best in terms of u get a bonus from the government but its genuinely locked away could this be used to purchase the vanguard 80 product or is that like a whole different ball game sorry if that makes no sense.

    I have kind of set my idea on just the normal S&S ISA purchasing the Vanguard 80/20 product and drip feeding into that but if i can use the same product but locked into a LISA which will give me a extra bonus in retirement then that could be appealing assuming the returns would be the same as the normal S&S version + the government bonus for being locked away
    'Save £1,100 in 2019' #81

    £50/£1100
  • Alistair31Alistair31 Forumite
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    bradqwer wrote: »
    could this be used to purchase the vanguard 80 product or is that like a whole different ball game sorry if that makes no sense.

    Yes.

    The LISA is the plastic carrier bag into which you place the VLS80 product.
  • edited 26 December 2018 at 8:29PM
    AlexlandAlexland Forumite
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    edited 26 December 2018 at 8:29PM
    If you get a S&S LISA from a DIY platform such as AJ Bell YouInvest or Hargreaves Lansdown you can buy into mixed asset funds including VLS80.

    I suggest you carefully study their fee structures before opening your LISA account. For funds the AJB percentage platform fee is lower but they charge £1.50 per trade. HL have a higher percentage platform fee but no charge for fund trades.

    As such AJB is more suited to investors who will make large infrequent trades and HL is more suited to small amounts, regular trades and/or holding multiple funds (not that you need to).

    To make it more complicated HL have negotiated a discount which reduces the Blackrock Consensus 85 fund fee to 0.09% which makes it significantly more attractive than VLS80 at 0.22%.

    You might notice that LISA platform fees are higher than the cheapest S&S ISA fees which slightly errodes the benefit of the 25% bonus.

    Alex
  • A_TA_T Forumite
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    Alexland wrote: »
    If you get a S&S LISA from a DIY platform such as AJ Bell YouInvest or Hargreaves Lansdown you can buy into mixed asset funds including VLS80.

    I suggest you carefully study their fee structures before opening your LISA account. For funds the AJB percentage platform fee is lower but they charge £1.50 per trade. HL have a higher percentage platform fee but no charge for fund trades.

    As such AJB is more suited to investors who will make large infrequent trades and HL is more suited to small amounts, regular trades and/or holding multiple funds.

    To make it more complicated HL have negotiated a discount which reduces the Blackrock Consensus 85 fund fee to 0.09% which makes it significantly more attractive than VLS80 at 0.22%.

    You might notice that LISA platform fees are higher than the cheapest S&S ISA fees which slightly errodes the benefit of the 25% bonus.

    Alex

    I wouldn't make a such a small difference in fees a determining factor in choosing - paying 0.13% more is not going to send you to the workhouse. I'd be more concerned that 35% of the equities in Blackrock Consensus 85 are in UK listed equities - mostly the FTSE 100.
  • AlexlandAlexland Forumite
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    A_T wrote: »
    I wouldn't make a such a small difference in fees a determining factor in choosing - paying 0.13% more is not going to send you to the workhouse. I'd be more concerned that 35% of the equities in Blackrock Consensus 85 are in UK listed equities - mostly the FTSE 100.

    Indeed according to HL data today Consensus 85 is 32% UK equities versus VLS80 at 23%. My LISA money is in Consensus 100 which is only 13% UK equities however we are again getting above the OPs stated risk tollerence. Unless they went lower risk in their S&S ISA to compensate?

    Alex
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