Starting my journey!

JoshRH93

Hi all, 

Please accept my apologies for my naivety in advance! I have read through a lot of posts and followed some but this is my first time posting. I’m 26 years old and looking to start my investment journey. I have bought my house and maxing pension contributions. I am confident I have an attitude suited to high risk and can deal with large swings due to my age and also low amounts invested at this stage. 

I have an initial small amount and will be investing around £500 per month. I can see the Vanguard funds are well recommended due to their diversity etc, I have researched the LS100 quite a bit. 

My main question is about global investment trusts however. I’d like to know, why don’t more people just hold investment trusts that are well proven, like Scottish Mortgage? I’m very tempted to put all my capital there due to everything I’ve said above obviously due to its high performance but also because it’s rated so well, basically everywhere. I understand it’s hugely volatile but that doesn’t really concern me as I don’t need the cash. 

Again, please forgive my naivety, I am sure there is a very valid reason other than volatility. 

Thanks 
Josh 

jscol

Hi Josh, everytime you invest you will see a disclaimer that reads 'Past performance is not a guide to future performance' and that should answer your question. If we all knew that historically well performing funds / investment trusts would carry on doing well we would all invest in them. The problem is we have no idea. Next year the likes of Scottish Mortgage might do really badly and that level of poor performance might continue for years. No-one knows until after the event. It's a bit different from saying you'll support Liverpool next year cos they've got a strong team this season. 

Albermarle

Also it is not usually a good idea to go 100% in on one investment, unless it specifically designed with inbuilt diversification, like a multi asset fund. If you go down this route , you should find a platform that only charges a small fee for regular investing, otherwise you could be hit with a £10 + dealing charge every month . Also some platforms have special low charges for holding IT's rather than funds.

george4064

Welcome to the forums, few questions to help understand your situation:

1. I see you have purchased your house, is this with a mortgage? Whats your LTV and interest rate? Is it a standard capital repayment mortgage or interest only?

2. Good to see you are contributing to your pension, however you should consider what you're investing in and how much you are actually investing (if you're really maxxing your pension contributions that means you're contributing £40,000 a year to it, is that true!?). At your age investing in a world equity tracker is a good idea since you have many years ahead of you to ride out boom and bust times. In terms of how much you are actually contributing, a good general rule is to contribute the % half of your age when you started contributing to your pension. So if you started contributing at aged 20, you should look to contribute at least 10% (include employer, employee and government contributions) to your pension, however you can always contribute more.

In general, you need to weigh up whether you're better off concentrating on either of the below or a combination of them;
- Overpaying your mortgage (assuming you have one, and depends on what LTV you're at).
- Additional pension contributions (know as AVCs).
- Contributing to your stocks & shares ISA.

Thrugelmir

SMT fell 60% in the 6 months to November 2008.  Well proven comes with huge caveats. 

MaxiRobriguez

Read up on Neil Woodford Josh, and then select a fund with inbuilt diversity across multiple sectors, countries and cap sizes, like VLS. 

badger09

Before you start your investing journey, do you have an emergency fund in accessible cash. Usual suggestion in normal times is at least 3 - 6 months essential expenditure. But these are not normal times, so an emergency fund is even more important.

Thrugelmir

MaxiRobriguez said:

Read up on Neil Woodford Josh, and then select a fund with inbuilt diversity across multiple sectors, countries and cap sizes, like VLS. 

The previous 25 years at Invesco counted for nothing? 

Sailtheworld

Thrugelmir said:

MaxiRobriguez said:

Read up on Neil Woodford Josh, and then select a fund with inbuilt diversity across multiple sectors, countries and cap sizes, like VLS. 

The previous 25 years at Invesco counted for nothing? 

Only to demonstrate that increased risk leads to increased return until it doesn't.

Thrugelmir

Sailtheworld said:

Thrugelmir said:

MaxiRobriguez said:

Read up on Neil Woodford Josh, and then select a fund with inbuilt diversity across multiple sectors, countries and cap sizes, like VLS. 

The previous 25 years at Invesco counted for nothing? 

Only to demonstrate that increased risk leads to increased return until it doesn't.

As day follows night. A future generation will put somebody else onto the pedestal instead. 

george4064

Such a shame the OP hasn't returned to their thread to answer questions and respond to peoples' replies!