Please advise. 30 YO Diligent saver, never invested

Mr.Saver

InvestingTroglodyte said:

I`m confused @Username999 I don`t understand that comment tbh )
Care to elaborate please? 

Username999 said:

Alz1986 said:

.... Some economists say we'll probably never have a global recession again.

Did you know economists have predicted nine out of the last five recessions?

Mr.Saver

I was posting on a different thread regarding the same topic: Which one is better? Lump-sum investing or drip feeding / pound cost averaging?
On this, a study conducted by Vanguard can be found here: https://personal.vanguard.com/pdf/ISGDCA.pdf

...
we compare the historical performance of immediate and systematic
investing across three markets: the United States, the United Kingdom, and Australia.
For the systematic plan, we invest the cash in a balanced 60% stock/40% bond portfolio
in 12 equal monthly installments.
...
In each market, immediate investment led to greater portfolio values approximately
two-thirds of the time. On average, immediate investment outperformed systematic
implementation by a high of 2.39 percentage points in the United States and a low of
1.45 percentage points in Australia.
...

Investing in VLS 20 at the beginning, and then ramping up to VLS 40, 60, 80 or 100 is just a different form of drip feeding, the result can be expected to be similar to the above study.

fiisch

It depends.  What are you intentions for this money?

I'm assuming you're saving for a house/deposit with the entirety of your savings, and diverting a small portion into stocks to try and improve returns?  Given you have a large amount of savings in a bank, I'd suggest you're better placed to take more of a risk.  I would be putting £6k straight into VLS100 and adding the £200/month to the same fund.  If it falls, it falls.  But equally, you could hold off and equities could continue to rise.  Provided you are investing for the long term, it doesn't matter - if your £6k becomes £3k over night, there's plenty of time for it to rebound.

I began investing 2 years ago aged 31, and went straight for VLS100 on the basis that I had other savings elsewhere, and I couldn't foresee an urgent need for the money - i.e.:  I could afford to wait out any market drops. 

InvestingTroglodyte

Thank you @MrSaver for the study links  and all others for the reposes.
@fiisch  I will aim for long term game and not bother with timing anything.
I will do 100% equity , I`ll put a lump sum and set regular payments that I don`t need in my day 2 day life and forget about if for 20years. 

I have a quick final dilema to solve. I don`t like LS100 because of the UK weight. 
FTSE All-World UCITS ETF (VWRL) gives dividents and doesn`t reinvest. Is there a drawback to this? Will I loose money if I want to buy more shares for the same fund out of those dividents? I like this one because it`s cheaper and has more Japan/China.
FTSE Global All Cap Index Fund - Accumulation This one  , but is newer smaller fund and has small cap companies. I like that this one has small cap companies too . 
Can someone help me figure out what are the advantages/disadvantages of one vs the other? 

Thank you kindly for helping.
Vick.

Mr.Saver

InvestingTroglodyte said:

I don`t like LS100 because of the UK weight.

Me neither, I also don't like the higher OCF (ongoing charges figure) of the VLS 100.

InvestingTroglodyte said:

FTSE All-World UCITS ETF (VWRL) gives dividents and doesn`t reinvest. Is there a drawback to this? Will I loose money if I want to buy more shares for the same fund out of those dividents? I like this one because it`s cheaper and has more Japan/China.
FTSE Global All Cap Index Fund - Accumulation This one  , but is newer smaller fund and has small cap companies. I like that this one has small cap companies too . 
Can someone help me figure out what are the advantages/disadvantages of one vs the other?

As you have correctly pointed out, VWRL pays dividends in cash and doesn't reinvest it automatically, and the FTSE Global All Cap Index Fund - Accumulation automatically reinvest dividends. You won't lose anything if you reinvest the dividends immediately after you receive them, and the platform doesn't charge you for doing so. But if you keep them as cash or the platform charges you for dividends reinvest, then you'd lose a little.
And you are right once again, the VWRL doesn't have smaller company shares, and the other one does. Small cap are riskier but there's also risk premium for investors taking the risk. It's completely up to the investor to decide whether to include small cap in their portfolio.
The things you've missed:
The VWRL is an ETF and the other is an OEIC. What does this mean to you? Investment platforms will likely to have different fee structure for them, and you will need to take that into consideration when choosing platforms. ETF is traded on stock exchange in real time every trading day, but you can't trade an OEIC in real time. For long term investors, this shouldn't be a concern.
The other thing worth mentioning is, VWRL is domiciled in Ireland which means if you hold it outside a tax wrapped account, you will need to fill Self-Assessment if you receive more than £300 dividends from it in a tax year. The other one is domiciled UK, so you don't need to fill in Self-Assessment unless you've receive more than £10,000 dividends. (but you will still need to tell HMRC if you need to pay tax on it)

chockydavid1983

You will be investing for the next 50 or 60 years so whether you lump sum or drip feed in will have little bearing on overall performance. Mathematically, you have the best chance of better returns from dumping it all in now.
Don't invest in mainly bonds now and more in equity later. Decide what your risk tolerance is and build your portfolio with the appropriate mix of equities / bonds (should be equity heavy at this stage - I am mid thirties and have around an 80/20 split atm)
IMO the Global ALl Cap is more diversified so that's what I hold.

InvestingTroglodyte

Awesome ! @MrSaver thanks so much !
I will go with VWRL in this case. Bigger, older and most importantly cheaper.
With regards to taxes, for the next 2-3 tax years I will be living in UK, and will be using a Stocks ISA so all good on that.
I hope this is a good all-rounder long term equity fund ?

Finally, I will be using Vanguard Investor platform for the Ftse All World (VWRL) .I read through their prospectus and side documents but still couldn`t figure out if it will cost me extra buying charges to reinvest the dividends into the fund myself though so I`m not sure? Do you happen to know? 
Thank you,
Vick.



 

 

pjcox2005

Just so we're not assuming, make sure you consider a LISA if you're saving for a house deposit as you get the 25% top up. You'll need to check criteria to make sure you qualify particularly as you reference being in the UK for next couple of years, but that would definitely be my starting point.

Mr.Saver

InvestingTroglodyte said:

Awesome ! @MrSaver thanks so much !
I will go with VWRL in this case. Bigger, older and most importantly cheaper.
With regards to taxes, for the next 2-3 tax years I will be living in UK, and will be using a Stocks ISA so all good on that.
I hope this is a good all-rounder long term equity fund ?

Yes, it definitely is.

InvestingTroglodyte said:

Finally, I will be using Vanguard Investor platform for the Ftse All World (VWRL) .I read through their prospectus and side documents but still couldn`t figure out if it will cost me extra buying charges to reinvest the dividends into the fund myself though so I`m not sure? Do you happen to know?

The Vanguard Investor platform don't charge you commissions for buying ETFs. So you can reinvest the dividends at no cost.