New Investor - please help!!

KN1357

Hi all, I'd really appreciate some advice regarding investing
My background:
Aged 27
Monthly income £2800
Saving approx. £650/month (often more)
Have £14,000 in savings currently
Risk appetite - high, I'm young and happy to put majority of money into equity

I've opened a savings account fairly recently to accrue interest but I'm very keen to start investing in the stock market. Obviously I'm very new, and I've decided to go via the passive index fund route. After doing some reading and research, I've decided to start investing £200/month into Vanguard's Lifestrategy 100 in the form of a S&S ISA.
As I currently can afford to invest more money and don't want my money sitting in a not so high savings account, I'd quite like to drip feed/regularly invest in other index funds too, but I'm stuck as to which ones to do. I don't want to put too much more into Lifestrategy given the UK bias.

 I was thinking Global All-Cap to offset UK bias, but was informed that this wouldn't be worth it given I've got LS100 already. S&P500? Would really value the advice as to other indexes to follow. I think I can confortably put in another £100-£150/month from drip-feeding savings or salary and possibly put some lump sumps in also.

Many thanks

eskbanker

KN1357 said:

I don't want to put too much more into Lifestrategy given the UK bias.

 I was thinking Global All-Cap to offset UK bias, but was informed that this wouldn't be worth it given I've got LS100 already. S&P500? Would really value the advice as to other indexes to follow.

If UK bias concerns you, why go with VLS100 in the first place?  Assuming you've perhaps found out about the UK bias after buying into it, then yes, going with something less biased as well would dilute the effect but wouldn't truly offset it as such.  If the global cap-weighting of Global All-Cap fits your desired target allocation, why not sell the VLS100 and go for that instead, rather than as well?

And, as always included on threads like this, are you sure you've got other priorities adequately covered off, such as pensions and incentivised products such as LISA?

KN1357

eskbanker said:

KN1357 said:

I don't want to put too much more into Lifestrategy given the UK bias.

 I was thinking Global All-Cap to offset UK bias, but was informed that this wouldn't be worth it given I've got LS100 already. S&P500? Would really value the advice as to other indexes to follow.

If UK bias concerns you, why go with VLS100 in the first place?  Assuming you've perhaps found out about the UK bias after buying into it, then yes, going with something less biased as well would dilute the effect but wouldn't truly offset it as such.  If the global cap-weighting of Global All-Cap fits your desired target allocation, why not sell the VLS100 and go for that instead, rather than as well?

And, as always included on threads like this, are you sure you've got other priorities adequately covered off, such as pensions and incentivised products such as LISA?

Thanks for your reply. So yes, I picked VLS100 after some recomendations and reading, and desire to start somewhere. I've only been with it for a month and wanted to see how it performed over a bit more time before jumping ship. My goal is to have 2-3 index funds and just leave it alone and readjust infrequently.

I have an NHS pension that I pay 9.3% of my salary into per month. I've looked into Lifetime ISAs also and will be looking to slowly pay £4K into it.

coyrls

If your goal is to readjust infrequently, then thinking of coming out of VLS100 after a month doesn't seem to meet your goal.

eskbanker

KN1357 said:
I picked VLS100 after some recomendations and reading, and desire to start somewhere. I've only been with it for a month and wanted to see how it performed over a bit more time before jumping ship. My goal is to have 2-3 index funds and just leave it alone and readjust infrequently.

Curious about that goal, the usual way to approach investing would be to identify your objectives (such as allocation) and then establish the most effective strategy via which to achieve them.  Unless you have a strong conviction requiring something fairly niche, it should be practical for an investor starting out to find a single product that fulfils that basic requirement, so it shouldn't be necessary to aim for multiple funds, or do you have a reason for doing that?

dunstonh

Thanks for your reply. So yes, I picked VLS100 after some recomendations and reading, and desire to start somewhere.

Who is making these recommendations?   You can understand VLS20, 40,60,80 but VLS100 is up against global trackers.  it doesn't look strong at all compared to the alternatives.  So, what recommendation were you given for VLS100 and why?

My goal is to have 2-3 index funds and just leave it alone and readjust infrequently.

Unless you use a global tracker, you are not going to be able to build a diverse structured portfolio with just 3 index trackers. And if you are going to be 100% equity based then you really only need a global tracker.   If you are going to use a multi-asset fund (if you dont have the risk profile for 100% equity) then you really only need one.      Unless you have decided to become a fund manager and make management decisions.

2unlimited91

Everything in VLS100, everything in Global All Cap, or a mixture of the 2, are all perfectly OK (if it's appropriate to you — 100% equities it not suitable for everybody!). The mixture is unnecessarily complex, but it won't do any real harm; you'll have some UK bias (from VLS100) but less than if you only held VLS100.

S&P500 won't make sense, if you are going to hold no more than 2 or 3 funds. It can make sense as part of a portfolio of 10 or so funds (but that doesn't just mean buy any 10 funds: it means first learn how to structure a more complex portfolio).

Whether you have VLS100, or Global All Cap, or a bit of both, will almost certainly make much less difference than your savings rate, and whether you are using the most appropriate tax wrappers (ISA, pension, LISA, ...).

KN1357

dunstonh said:

Thanks for your reply. So yes, I picked VLS100 after some recomendations and reading, and desire to start somewhere.

Who is making these recommendations?   You can understand VLS20, 40,60,80 but VLS100 is up against global trackers.  it doesn't look strong at all compared to the alternatives.  So, what recommendation were you given for VLS100 and why?

My goal is to have 2-3 index funds and just leave it alone and readjust infrequently.

Unless you use a global tracker, you are not going to be able to build a diverse structured portfolio with just 3 index trackers. And if you are going to be 100% equity based then you really only need a global tracker.   If you are going to use a multi-asset fund (if you dont have the risk profile for 100% equity) then you really only need one.      Unless you have decided to become a fund manager and make management decisions.

Thanks for your advice. I very much want to keep things as simple but as diversified as possible. I'm tempted to go 50% VLS100 and 50% All-Cap (or alternative) and see how they both perform over the next 18 months and then decide from there which one to commit to. 

And I have no plans for becoming a fund manager (I'm a doctor by trade!)

KN1357

2unlimited91 said:

Everything in VLS100, everything in Global All Cap, or a mixture of the 2, are all perfectly OK (if it's appropriate to you — 100% equities it not suitable for everybody!). The mixture is unnecessarily complex, but it won't do any real harm; you'll have some UK bias (from VLS100) but less than if you only held VLS100.

S&P500 won't make sense, if you are going to hold no more than 2 or 3 funds. It can make sense as part of a portfolio of 10 or so funds (but that doesn't just mean buy any 10 funds: it means first learn how to structure a more complex portfolio).

Whether you have VLS100, or Global All Cap, or a bit of both, will almost certainly make much less difference than your savings rate, and whether you are using the most appropriate tax wrappers (ISA, pension, LISA, ...).

Hi, thanks for this. As mentioned above, I may go for 50% of both and reassess performance in about 18months or so and pick one. I guess I'm not really going for a complex portfolio at the moment, I know my limitations! I'm happy to go for 100% equities - I'm in it for the long term.
Reading on the internet (often a dangerous place), that S&P500 has outpeformed most indexes so I was thinking it would be a good one to add in. But again that would geographically narrow the spread, so I'll consider this further down the line.

Question (apologies for my ignorance) - can you pick an index that your LISA goes it? So you could earn 25% + the return on the money you put in?

2unlimited91

A LISA is just a wrapper, like S&S ISA, so you pick whatever investment(s) you want to buy inside it. That applies to both the cash you subscribe and the 25% bonus for the LISA (which will appear after a month or 2).

Sebo027

@KN1357 - Check out VWRL or consider a combination of SWDA + EIMI. 
The later two provide exposure to developed (SWDA) and emerging (EIMI) markets. You get both with VWRL. 
If you want diversification, they are globally diversified low cost ETFs with approximately 58% holdings in the US.