Other funds ideas apart from VLS

SurfacePro

Cheers buddy. You make a lot of sense

bostonerimus

SurfacePro wrote: »

Hey Everyone,
1. I want to open an SIPP with cavendish for £500 per month. I was wondering if there other equivalent funds like Vanguard Life Strategy 60 to consider. I already have an ISA with Vanguard and I don't know if it makes sense to have vanguard as SIPP.
2. Is it worth buying various funds to diversify my portfolio. My initial thought was to select one fund and pay in £500. Will various management charges eat into my SIPP if I select 2 or 3 funds instead of 1. Am new to pensions and investment. Am 35 years if it helps.

If you chose VLS60 as a good fund for you in an ISA, I see no compelling reason why you wouldn't also use in in a SIPP. It's a very sensible fund for some long term growth along with a bit of fixed income for stability. Vanguard doesn't itself offer a pension wrapper like a SIPP so you'd have to go to another platform to do that, but you could then buy VLS60 inside it. Of course they are many similar funds, and the difference is often only in the label so owning one of those would be equally good. Remember the investing business is all about marketing a product to you and you need to understand what's in the packet before you buy.

VLS60 is an incredibly diverse fund and so if you want to change the asset allocation in your portfolio away from that, then you should have a clear idea of what you want to achieve rather than just buying another fund because it gives you two funds in your portfolio....they might have almost the same asset allocation, ie ingredients, and so you will have achieved nothing.

Multi-asset funds like VLS60 are made up of a wide variety of index trackers and there are some initial decisions made about the asset mix, but they are really just an off the shelf portfolio of index trackers that automatically rebalances. They save the passive investor a lot of work. Excluding the single tracker fund, they are about as far as you can get from an actively manage fund or portfolio.

bostonerimus

dunstonh wrote: »

Its not quite as simple as that. By picking Vanguard over HSBC you have made a management decision. By picking a fund at a certain risk profile, you have made a management decision. The fund house with the multi-asset fund has made management decisions.

It's very easy to get lost in the investing woods and end up not seeing the wood for the trees. There are millions of routes into through and out of the forest and a lot of then will be just fine for you and no better than any other.....a few will lead to terrible outcomes and a few to a golden treasure hoard. But the sensible course is to stick to the middle and not worry too much about the other paths that you didn't chose...cos most of them are just like yours.

Life needs you to make decisions and it's good that you have chosen to do some investing, that's not exactly active investing though. The crucial thing is to understand what you are doing and why. If someone comes along and says that for a fee they will get you a better return than some benchmark make sure you understand how they will do that rather than taking it on trust, of course they'll never be very definitive or promise you your money back if they fail,...and if you think you can do that yourself make sure you understand why and how it will be done rather than just buying a miscellaneous group of actively managed funds.

For most people a low cost portfolio of index funds is a good path to take through the forest.

SurfacePro

Thank you. Does it make any difference if I buy a fund that is sold at say £120 per unit or go for funds that sell for say £2 per unit as an example. With £500 per month I will only get roughly 3 units per month for £500 than say £2per unit fund. Any opinion on that.

dunstonh

SurfacePro wrote: »

Thank you. Does it make any difference if I buy a fund that is sold at say £120 per unit or go for funds that sell for say £2 per unit as an example. With £500 per month I will only get roughly 3 units per month for £500 than say £2per unit fund. Any opinion on that.

No difference.

10x2 is the same as 2x10