Vanguard Lifestratgy & FTSE All-World High Dividend

CyberAl

In looking into dividends and really interested in what can be achieved with reinvesting the yeild.

I'm 22 and new to investing. I already put £300 into Vanguard Lifestrategy 80% S&S ISA but looking at putting £200 into FTSE All-World High Dividend Yield UCITS ETF (VHYL).

What is your opinions on this or would it be better to put that extra £200 into the Lifestrategy to get better compounds?

In like 35 years I would like to live on dividends rather than take the invested money.

I like investing and watch way too many YouTube videos like Graham Stephan and killik & co updates and recently started watching vids on dividends index/etfs.

Any help would be generally appreciated.

Hope you all have a good weekend :j

MaxiRobriguez

The VHYL is heavily concentrated in the US, with stocks such as JPMorgan, Johnson and Johnson, Nestle, Proctor and Gamble, Exxon, Pfizer for example. Big corporates who've been around for donkeys and dominate their markets.

What you don't get much of is technology stocks, or exposure to emerging markets, so long term capital growth is less likely than a fund which contains such things.

It's a bit of a tricky one at the moment. Usually the advice for a young investor with a very long investment horizon is just to ramp up growth equities and stay invested throughout the volatility, but right at this precise moment stocks, especially growth stocks, are very heavily priced, right at the moment growth is starting to peter out. There's been some sort of rotation into dividend yielding stocks too.

Personally if it was me and you don't have a specific strategy then I'd just keep it simple and go straight down the middle with a global tracker, which'll give you both growth and dividend stocks in a neutral weighting.

thickasabrick

£200 will get you about 4 units of VHYL at the current price of £43.81.
The dividend last year was £1.51 per unit
https://www.justetf.com/uk/etf-profile.html?isin=IE00B8GKDB10&tab=dividends

As a learning exercise it’s certainly worth it.

Look carefully at the difference between accumulator and dividend funds.
At the early stage of building up your net worth, the growth of price per unit (share price) and dividends is not significant. What is significant is your savings or investment rate (how much you manage to save and invest) and the costs for trading (buying the shares, units in funds) and holding them (cost for the account holding the investments).
That is why the most popular advice for people new to investments is to go with a low cost global tracker.
A few of the more experienced posters on here also recommend looking at global trackers from other providers.

I suspect you’ve read the following articles as you’ve gone for Vanguard offerings ?

JLCollins stock series blog ?
It’s also explained very well by Lars Krojer on his investing demystified website.
For a more UK centric explanation look for the article “The Simplicity Portfolio” by the escape artist.

CyberAl wrote: »

In looking into dividends and really interested in what can be achieved with reinvesting the yeild.

I'm 22 and new to investing. I already put £300 into Vanguard Lifestrategy 80% S&S ISA but looking at putting £200 into FTSE All-World High Dividend Yield UCITS ETF (VHYL).

What is your opinions on this or would it be better to put that extra £200 into the Lifestrategy to get better compounds?

In like 35 years I would like to live on dividends rather than take the invested money.

I like investing and watch way too many YouTube videos like Graham Stephan and killik & co updates and recently started watching vids on dividends index/etfs.

Any help would be generally appreciated.

Hope you all have a good weekend :j

NedS

At your age your primary investment priority should be growth. Of course the compounding effects of reinvesting dividends is an important part of growth of your investments, but I wouldn't focus too heavily on it.

Dividend paying companies tend to be large cap companies with limited growth potential where most of the growth tends to come from the compounding effect of dividend reinvestment. Given your age, I would focus on being well diversified. If you are going to be overweight in any particular area, at your age I would look towards smaller companies and/or emerging markets which have traditionally given better returns that large caps with high dividend yields.

Vangaurd LS80 is a good choice for a core fund holding, and I'd then look to compliment it with maybe 20% in a good global small cap fund, if I were in your shoes.