Small Pot for First Investment

Zero_Sum

Alexland wrote: »

Do we know anyone that has managed to setup a regular investment at under £100 per month? The help page suggests the £100 minimum should still apply on an existing account?



Alex

I have. I have also made lump sums under £500 which it also say is the minimum

Alexland

Zero_Sum wrote: »

I have. I have also made lump sums under £500 which it also say is the minimum

So would they go as low as £1 per month?

I wonder if they would let someone open an account with £100 per month and drop to £25 per month from month 2? I am tempted to open a GIA to try it.

Alex

Zero_Sum

Alexland wrote: »

So would they go as low as £1 per month?

I wonder if they would let someone open an account with £100 per month and drop to £25 per month from month 2? I am tempted to open a GIA to try it.

Alex

I have a DD for a £1 going into my cash account in vanguard, for investment funds ive done as low as £5 both regular DD & lump sum payment

Alexland

Zero_Sum wrote: »

I have a DD for a £1 going into my cash account in vanguard, for investment funds ive done as low as £5 both regular DD & lump sum payment

Interesting so when we get first time investors here who want to invest £50 per month or £25 per month rather than sending them to Cavendish and HL respectively we might need to check if they are willing to make a £100 first month contribution perhaps?

Alex

brasso

eskbanker wrote: »

Only invest if you're happy to commit for at least 7 years and preferably 10-15.

I know this is standard advice but I don't agree with it. I'm not aware of any mainstream diversified investment funds or trackers that have required 10-15 years to prove themselves a better investment than a bank account.

That said, if the OP wants 100% certainty that their capital will be preserved they should keep it in a savings account. If they are in no hurry to use the cash, and especially if they are able to drip-feed further regular deposits* they are very likely to show a decent profit in a much shorter period than stated, which will start building insulation against occasional, but inevitable, market drops.

*The OP should google "dollar cost averaging".

I agree that costs are important to watch out for, so as others have said, Vanguard Lifestrategy would be a decent choice for diversification and low cost. Personally I'd stick it all in the 100% variety of Lifestrategy. Returns over the last 5 years have been:
+15.02%, -2.42%, +31.04%, +12.76%, -0.08% and they charge just 0.22% a year.

eskbanker

brasso wrote: »

eskbanker wrote: »

Only invest if you're happy to commit for at least 7 years and preferably 10-15.

I know this is standard advice but I don't agree with it. I'm not aware of any mainstream diversified investment funds or trackers that have required 10-15 years to prove themselves a better investment than a bank account.

I must admit that I don't have examples readily to hand but have previously read historical data quoted on here that highlight how the odds of positive returns improve substantially for successively longer periods, so there are many more 3 year periods showing losses than 7 year ones, for example. I didn't say that 10-15 years are required, just that if, hypothetically, someone invested with an intention to cash out in exactly 7 years, that could be immediately after a crash, so leaving it longer and with a broader redemption window improves the probability of achieving a gain that can be crystallised.

brasso wrote: »

Personally I'd stick it all in the 100% variety of Lifestrategy. Returns over the last 5 years have been:
+15.02%, -2.42%, +31.04%, +12.76%, -0.08% and they charge just 0.22% a year.

But another of the golden rules of investment is that past performance isn't a reliable guide to future performance! Of course recent years have been generally positive, as we've been on a long bull run since the last crash, with a few small corrections along the way, but expecting that to continue over the next few years would be foolish. VLS100 will naturally have outperformed lower risk/volatility funds during this run but of course it'll be expected to underperform them in other parts of the economic cycle....

Thrugelmir

brasso wrote: »

I know this is standard advice but I don't agree with it. I'm not aware of any mainstream diversified investment funds or trackers that have required 10-15 years to prove themselves a better investment than a bank account.

How long have you been investing for?

masonic

brasso wrote: »

I know this is standard advice but I don't agree with it. I'm not aware of any mainstream diversified investment funds or trackers that have required 10-15 years to prove themselves a better investment than a bank account.

That said, if the OP wants 100% certainty that their capital will be preserved they should keep it in a savings account. If they are in no hurry to use the cash, and especially if they are able to drip-feed further regular deposits* they are very likely to show a decent profit in a much shorter period than stated, which will start building insulation against occasional, but inevitable, market drops.

*The OP should google "dollar cost averaging".

I agree that costs are important to watch out for, so as others have said, Vanguard Lifestrategy would be a decent choice for diversification and low cost. Personally I'd stick it all in the 100% variety of Lifestrategy. Returns over the last 5 years have been:
+15.02%, -2.42%, +31.04%, +12.76%, -0.08% and they charge just 0.22% a year.

Over a 5 year investment period, using the sort of asset allocation found in VLS100 and using 100 years worth of historic data, was is a >30% chance of getting back less than you invested. The probability of underperforming a fixed rate savings account would have been substantially higher. If you just look at recent performance during the current 10 year bull market then you are likely to be sorely disappointed.

"Dollar cost averaging" doesn't help much over a short investment period because although later contributions may buy units at lower and lower prices, there is less and less time for units to appreciate in value.

Zero_Sum

Alexland wrote: »

Interesting so when we get first time investors here who want to invest £50 per month or £25 per month rather than sending them to Cavendish and HL respectively we might need to check if they are willing to make a £100 first month contribution perhaps?

Alex

Or even better, could try putting £500 in the cash account, create small DD, then withdraw money from cash account.

brasso

Thrugelmir wrote: »

How long have you been investing for?

That's a little bit patronising, but since 1998.

Edited -- that was when I first used the internet to research & buy shares/funds using a platform. I was originally a "Tell Sid" investor back in whenever -- the 80s.