Increasing deposits in light of covid19?

JustAnotherSaver

All this is really baffling my head to be honest. Not sure if i will get any feedback from this post but if nothing else i'll use it as a reference for myself at a later date.

The mind state at the moment is that i don't know whether it's sound going ahead private investing or whether i'd be better paying an IFA to do it. Already been over the IFA thing where their costs would just eat chunks in to my gains but then in such a situation as we're in now they'd surely be better placed and i wonder - would they switch funds, would they leave, if switching what would they switch to. Who knows.

Then i read on here today 2 comments that really make me question whether i'm doing the right thing by staying put and not making any knee-jerk decisions....

* that index trackers aren't so great to be investing in (goes against everything i'd read up until this virus became a major problem)

* that index trackers are 'a fad'. A fad to me is a 5 minute thing that was never that great once you look back on it.

Since that's the basis of my investments i wonder whether i'm doing myself some serious long term harm. Despite everything i read saying the answer is no, i still wonder am i invested badly with the VLS & HSBC ranges. If i am then i guess i'm not alone.

So much contradictory information. Just blows my mind to the point you're not sure whether to go left or right. If you pick either then you'll likely be wrong and should've gone straight ahead.

Alexland

But back on topic, the plan was (before all this madness) to move to LISA contributions rather than pension ones. AJ Bell seems cheaper than H/Lansdown but you get hit £1.50 per time for trading. Not quite sure which platform will work out cheaper in the long run for a LISA.

Eventually once the account valuation gets high enough AJ Bell works out cheaper as you can hold an ETF and benefit from their capped £30 fee plus use their regular invest £1.50 to buy more ETF units from the account cash balance. HL cap at £45 but you can only use their regular investment trade price for ETFs against the contribution and the bonus would cost £11.95 to invest.

Even if you are sticking to funds then the £1.50s become less significant compared to the 0.20% platform fee saving as the account valuation grows so AJ Bell is still the best in the long run assuming you are looking to build a good sized LISA stash.

masonic

JustAnotherSaver said:

Then i read on here today 2 comments that really make me question whether i'm doing the right thing by staying put and not making any knee-jerk decisions....

* that index trackers aren't so great to be investing in (goes against everything i'd read up until this virus became a major problem)

* that index trackers are 'a fad'. A fad to me is a 5 minute thing that was never that great once you look back on it.

People have been saying both of those things for pretty much as long as I've been frequenting these forums. Others disagree. There have been multiple threads running into hundreds of pages of people squabbling over active vs passive. I'm presuming you've been aware that some people disagree on which investment strategies deliver the best results. So why start taking to heart those alternative views now?

port_of_spain

Trackers aren't a fad. That's an OTT comment from somebody who probably enjoys active management of their portfolio, whether or not it does a better job for them than a more passive strategy using trackers would do.

Clearly, both passive and active strategies can do an acceptable job. However, the more passive approach is easier to implement, since it avoids the need to work out which active managers to use (or what individual shares to pick, if you wanted to make the job even bigger); and easier again, if you just use multi-asset funds. And passive has a big cost advantage over active.

Alexland

Some of the recent lazy press articles about how passive funds go down (who knew?) and suggesting an active approach would have protected you better (by 'highly skilled' stock picking or just taking less risk which can be done via asset allocation using passives) miss the point that low cost passive investment is about the long term result outperforming most active strategies that you may have selected and the difficulty in correctly switching between active strategies as the market changes.

JustAnotherSaver

Alexland said:

Eventually once the account valuation gets high enough AJ Bell works out cheaper as you can hold an ETF and benefit from their capped £30 fee plus use their regular invest £1.50 to buy more ETF units from the account cash balance. HL cap at £45 but you can only use their regular investment trade price for ETFs against the contribution and the bonus would cost £11.95 to invest.

Even if you are sticking to funds then the £1.50s become less significant compared to the 0.20% platform fee saving as the account valuation grows so AJ Bell is still the best in the long run assuming you are looking to build a good sized LISA stash.

To be honest i'm familiar with funds but not ETFs. I've seen the term and i've read what it means but after that i still say ........"what?"

Problem is, i can be taught very well. If someone can break something (not necessarily investing) down so that i 'get it' then i pick things up quick enough, BUT i can't self-teach too well. I forever have too many questions and forever doubt myself so back on topic, when it comes to investing (which is even worse because there is no real right/wrong) i can't really self teach as i forever think i've got 'it' wrong.

I left all this quite late. I only really looked at my portfolio last Friday (because set and forget...right?).

It's a strange conflicting feeling. On the one hand, don't do anything in a panic. Stick to the plan. History dictates that everything should come good since my time frame is long.

What makes me doubt myself is when i see people i assume are more in the know than I making adjustments to 'stop the rot' which makes me ask myself ... what do they know that i don't (other than a lot)?

masonic said:

People have been saying both of those things for pretty much as long as I've been frequenting these forums. Others disagree. There have been multiple threads running into hundreds of pages of people squabbling over active vs passive. I'm presuming you've been aware that some people disagree on which investment strategies deliver the best results. So why start taking to heart those alternative views now?

Because i'm easily thrown by people who don't talk straight on a topic i don't totally 'get'. People love to talk in metaphors and i just think, get to the bloody point and talk English. Say what you mean. I was on monevator earlier trying to gain knowledge. In the end i left the website because it was like reading a damn crossword puzzle. Sometimes you just would like for people to talk straight English.

Why am i questioning things now? Exceptional times perhaps. First time i've ever encountered a drop like this. Makes me question whether there is something i should do (switching funds) to stop/slow the rot/drop and then when everything calms down and gets back to 'normal', switch investments again, as others appear to be doing.

But then after reading Lars Kroijer's book (and similar) and being in agreement with it, that would then be saying i have an edge right? Which i most certainly do not.

Which makes me think i should stick with the original plan (index tracker) but then i immediately think ... but is that right?

LoL. 1001 questions i know. Forever wondering.

masonic

JustAnotherSaver said:

What makes me doubt myself is when i see people i assume are more in the know than I making adjustments to 'stop the rot' which makes me ask myself ... what do they know that i don't (other than a lot)?

There are some very knowledgeable posters on this forum and I often learn from their comments, but I'm not inclined to follow what they are doing, or indeed necessarily agree with their conclusions even if they make valid points. We all have our own circumstances and objectives, and need to formulate a plan that is both sensible for us and within our power to execute.

You may find this post interesting: https://forums.moneysavingexpert.com/discussion/comment/76941145/#Comment_76941145 

JustAnotherSaver said:

But then after reading Lars Kroijer's book (and similar) and being in agreement with it, that would then be saying i have an edge right? Which i most certainly do not.

Which makes me think i should stick with the original plan (index tracker) but then i immediately think ... but is that right?

It sounds like you have given your strategy plenty of consideration, and have based it upon a sound foundation. You have done sufficient research and most importantly, you know what you do not know. There are certainly those frequenting the forum who are adamant that they know what is going to happen to investments over the next few years. Sadly those people are deluding themselves. Nobody knows what is going to happen in the short term. Others have different objectives and priorities such as protection of capital accumulated over many years, and it is right for them to act accordingly, even if somewhat belatedly. But there would seem to be a majority who have made no substantial changes to the way they invest.

JustAnotherSaver

As i managed to get up with my alarm this morning i was trying to crunch numbers and i know i've got something very wrong somewhere.

Let's compare HL & AJ Bell as far as LISA goes.

£4000 per year. It'd likely be made up of monthly contributions £333.33. Not sure if that makes a difference to calculations but i didn't know how to work that our so i just went with the £4000.

HL: 0.45% of £4000 is £18.

done

AJ Bell: 0.25% of £4000 is £10

£1.50 per dealing .... as i'd be contributing monthly, would be £18.

£10+£18=£28

AJ Bell worse off by £10 year 1.

As HL is often talked about as being so expensive and AJ Bell as being one of the cheapest, i've clearly got something wrong.

Zorillo

Well yes, you've picked a monthly investment strategy which isn't suited to AJ Bell's dealing fees.

If you only invested annually, you'd incur £1.50 instead of £18 and your total cost would be £11.50 which is £6.50 better 'year 1'.

Alexland

Zorillo if investing annually you would incur 0.25% on the whole account valuation a second £1.50 for the bonus unless you delayed your investment until the cash balance for the year was complete.

Also, if sticking to funds, once the LISA account balance gets big enough eg £15k (after 3 years at £4k + £1k bonus pa) then HL 0.45% is £67.50 and AJB 0.25% is £37.50 leaving a difference of £30 to spend on £1.50 trade fees. After 6 years at £30k then the HL 0.45% is £135 and the AJB 0.25% is just £75 leaving a difference of £60 to spend on £1.50 trade fees or keep. All this ignores the investment growth or losses.

If doing a regular trade with AJB the trick is to setup a regular contribution of 333.33 per month but then setup a regular £1.50 trade of £416.66 per month (to include the bonus, or maybe a bit less to allow for platform fees which can be paid from the general account on request) to start from after the second regular contribution is made. Otherwise if investing the bonus separately that would be 24 trades per year.