Good index fun for a longterm non-savvy investor?

Sebo027

VWRL - https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing/overview
SWDA - https://www.ishares.com/uk/individual/en/products/251882/ishares-msci-world-ucits-etf-acc-fund

dunstonh

jim_arm_chair said:

I just picked the FTSE100 as an arbitrary benchmark. What I really want to do is follow Warren Buffett's advice and essentially "bet on the market" as I don't know how to pick winners and losers, and I hear that even for professionals it's a hard thing to do. I posted here as I don't know which is a sensible fund.  

So the FTSE250, UK All-Share or FTSE Global All Cap would all be more balanced options? 

Warren Buffet said it to a US audience based on US investments and taxation.  The UK is different (both in terms of taxation and the way we invest.  The US is very inward looking. It can afford to be with the size of its economy.     The UK is more global looking and UK investors are not inward looking. Plus, they do not suffer the taxation issues that the US has.
Warren Buffet also does not follow his own comments.   He is a value investor.
Single sector investing is bad investing regardless of the area you choose.   Global is certainly better if you are happy to invest in a high risk strategy (most UK consumers are not).

Albermarle

You're missing the point though, the questions you're referring to aren't "asking if 2+2=4" (where there's a simple clear answer to a straightforward closed question, assuming it's not base 3 arithmetic ) but are more analogous to "what would be a good car for me?".

Or another way of looking at is that the posters say if you ask 2 + ? then what does that equal?

eskbanker

Venturing even further off-topic, this puts me in mind of a typically pithy Billy Bragg lyric from around the time of the collapse of the Soviet Union:

In Leningrad the people say
Perestroika can be explained this way
The people who told us
That two and two is ten
Are now trying to tell us
That two and two is five

Sebo027

dunstonh said:

jim_arm_chair said:

I just picked the FTSE100 as an arbitrary benchmark. What I really want to do is follow Warren Buffett's advice and essentially "bet on the market" as I don't know how to pick winners and losers, and I hear that even for professionals it's a hard thing to do. I posted here as I don't know which is a sensible fund.  

So the FTSE250, UK All-Share or FTSE Global All Cap would all be more balanced options? 

Warren Buffet said it to a US audience based on US investments and taxation.  The UK is different (both in terms of taxation and the way we invest.  The US is very inward looking. It can afford to be with the size of its economy.     The UK is more global looking and UK investors are not inward looking. Plus, they do not suffer the taxation issues that the US has.
Warren Buffet also does not follow his own comments.   He is a value investor.
Single sector investing is bad investing regardless of the area you choose.   Global is certainly better if you are happy to invest in a high risk strategy (most UK consumers are not).

Why do you see a global strategy as a higher risk investment?

eskbanker

Brido88 said:

dunstonh said:

jim_arm_chair said:

I just picked the FTSE100 as an arbitrary benchmark. What I really want to do is follow Warren Buffett's advice and essentially "bet on the market" as I don't know how to pick winners and losers, and I hear that even for professionals it's a hard thing to do. I posted here as I don't know which is a sensible fund.  

So the FTSE250, UK All-Share or FTSE Global All Cap would all be more balanced options? 

Warren Buffet said it to a US audience based on US investments and taxation.  The UK is different (both in terms of taxation and the way we invest.  The US is very inward looking. It can afford to be with the size of its economy.     The UK is more global looking and UK investors are not inward looking. Plus, they do not suffer the taxation issues that the US has.
Warren Buffet also does not follow his own comments.   He is a value investor.
Single sector investing is bad investing regardless of the area you choose.   Global is certainly better if you are happy to invest in a high risk strategy (most UK consumers are not).

Why do you see a global strategy as a higher risk investment?

You're misinterpreting what's being said - the message is if you're happy to invest in a high risk strategy (i.e. 100% equities) then doing so globally is better than locally.

bowlhead99

Brido88 said:

dunstonh said:

Single sector investing is bad investing regardless of the area you choose.   Global is certainly better if you are happy to invest in a high risk strategy (most UK consumers are not).

Why do you see a global strategy as a higher risk investment?

If you invest globally rather than locally you are taking greater exposure to foreign political issues, less-developed stockmarkets and overlaying movements from currency appreciation/depreciation on top of the underlying investment volatility. 

Diversification is good (so that, e.g., you are not taking full exposure to UK domestic economic and market issues), but as a consequence of some of the above things, a 100% equity allocation that incorporates overseas markets can give greater valuation swings.

Over the long term, things like currency movements will probably average out and not be a major concern. But in the short term, they add greater volatility - for example if the global ex-UK index drops 50% and UK currency strengthens by 15% at the same time, the UK investor loses, say, 57% rather than just 50%.  Of course, at other times the currency might have worked in the UK investor's favour and he might have only lost 40% instead of 50%. But when modelling maximum drawdown or worst-case scenarios, one can imagine a foreign holding can be more volatile than a domestic one due to such factors, and therefore be considered 'higher risk', even if long term it is better to get more broadly diversified growth by using an international mixed asset portfolio.

dunstonh

Brido88 said:

dunstonh said:

jim_arm_chair said:

I just picked the FTSE100 as an arbitrary benchmark. What I really want to do is follow Warren Buffett's advice and essentially "bet on the market" as I don't know how to pick winners and losers, and I hear that even for professionals it's a hard thing to do. I posted here as I don't know which is a sensible fund.  

So the FTSE250, UK All-Share or FTSE Global All Cap would all be more balanced options? 

Warren Buffet said it to a US audience based on US investments and taxation.  The UK is different (both in terms of taxation and the way we invest.  The US is very inward looking. It can afford to be with the size of its economy.     The UK is more global looking and UK investors are not inward looking. Plus, they do not suffer the taxation issues that the US has.
Warren Buffet also does not follow his own comments.   He is a value investor.
Single sector investing is bad investing regardless of the area you choose.   Global is certainly better if you are happy to invest in a high risk strategy (most UK consumers are not).

Why do you see a global strategy as a higher risk investment?

Because by any measure, it is.
100% equities is up the top end of the conventional investment scale.  The average UK consumer is generally cautious and more suited to around 40-50% equities.  That doesn't mean that 100% equities is unsuitable for you as any average means there are people above and below.    It is also worth noting that it is quite normal for new DIY investors to go investing above their risk profile without understanding.

bostonerimus

jim_arm_chair said:

Im looking to take advantage of the current downturn and invest some cash savings in the market. I don't know much about investing so a simple low maintenance option would be best. 

Im investing long term (5+ years). This money is only a 1/5 of a larger pot of savings that I have with a money manager so I can accept some risk. 

Warren Buffett said "A low-cost index fund is the most sensible equity investment for the great majority of investors" so I was planning on going with one of these through Vanguard. Would the FTSE 100 Index Unit Trust Accumulation be a good choice? 

Before you invest make sure you understand what you are doing and why you are doing it. So do your research and education yourself first. You need to take a holistic approach to your finances so your investments must be appropriate to your circumstances, having said that a multi-asset fund made up of a number of diverse index funds is a pretty good solution for a lot of people. A single index fund on it's own leaves out many asset classes and something as focused as the FTSE100 is not broad enough on its own.

kinger101

jim_arm_chair said:

Bowlhead99 - I think my money manager is doing an OK job. The performance of the fund has been roughly inline with the FTSE100. 

Without knowing the split between bonds and equities, it's impossible to know.  But if you're 100 % equities, I'd say your money manager is doing substantially less than OK.