Does my plan need altering already?

83705628

Sebo027 said:

@AdmanPea
Check out these videos: https://www.youtube.com/watch?v=3psiPdkW_Ao&t=3s

/
This is actually a good series

AnotherJoe

AdmanPea said:

Hi all

I recently started investing for the first time after reading lots of stuff, listening to lots of stuff, and eliminating debt and creating a block of savings. 

I decided to open a Vanguard LifeStrategy 60% and 80% with the idea being that I put £100 a month into each for the next 20 years (possibly increase contributions over time). However, given the current state of the finances in the country and the outlook ahead, is this something I should already alter? I know I'm playing the long game here but I'm also conscious that once reality hits the economy the slump could be devastating for a long, long time. 

What do you think? Keep going as is and it'll ride out okay or tinker with what I'm doing just a few months in to the plan? 

If it's "devastating" for a long time, say 15 years, and you are investing for 20, that means you are buying really cheap for 15 years and will benefit Much more when it recovers than if a vaccine was discovered tomorrow and we all went back to normal next week. So the only change to your plan would be to stop buying 60 and 80 and buy 100. 
An analogy often used here, suppose you often buy dishwasher tablets (or any other long lived item). They are half price at the moment. Do you buy more now, or do you say "I'll wait till they come back to their usual price" ?
Subsidiary point - for a span of 20 years, IMO VLS 70, (which is what you've got) is too cautious and you'd be better off with 80 or 100 though given your worry now  when you should be buying more, maybe that fits your psychology better. 

Second subsidiary point, there are better options than VLS. The "U.K." component, focussed as it is on oil and finance, will drag down performance. 

83705628

AnotherJoe said:

AdmanPea said:

Hi all

I recently started investing for the first time after reading lots of stuff, listening to lots of stuff, and eliminating debt and creating a block of savings. 

I decided to open a Vanguard LifeStrategy 60% and 80% with the idea being that I put £100 a month into each for the next 20 years (possibly increase contributions over time). However, given the current state of the finances in the country and the outlook ahead, is this something I should already alter? I know I'm playing the long game here but I'm also conscious that once reality hits the economy the slump could be devastating for a long, long time. 

What do you think? Keep going as is and it'll ride out okay or tinker with what I'm doing just a few months in to the plan? 

If it's "devastating" for a long time, say 15 years, and you are investing for 20, that means you are buying really cheap for 15 years and will benefit Much more when it recovers than if a vaccine was discovered tomorrow and we all went back to normal next week. So the only change to your plan would be to stop buying 60 and 80 and buy 100. 
An analogy often used here, suppose you often buy dishwasher tablets (or any other long lived item). They are half price at the moment. Do you buy more now, or do you say "I'll wait till they come back to their usual price" ?
Subsidiary point - for a span of 20 years, IMO VLS 70, (which is what you've got) is too cautious and you'd be better off with 80 or 100 though given your worry now  when you should be buying more, maybe that fits your psychology better. 

Second subsidiary point, there are better options than VLS. The "U.K." component, focussed as it is on oil and finance, will drag down performance. 

/
If the OP is new to investing they really shouldn't be thinking about market timing.
Also the bit about VLS has absolutely no evidence behind it.
There are other similar types of funds offered by BlackRock, iShares, Fidelity, HSBC etc. VLS slightly upweights the UK whereas a globalist investor would say a "pure" VLS should be 100% global and so ~5% UK, and a pure domestic investor would say 100% UK is normal.

dunroving

Sebo027 said:

@AdmanPea
Check out these videos: https://www.youtube.com/watch?v=3psiPdkW_Ao&t=3s

Thanks for the heads-up. I just watched the first few and have subscribed to the channel.

Albermarle

I have a workplace pension which is still (as it stands) a final salary defined benefits scheme with high employer contributions. 
More important than choosing which investment fund to buy , make sure you keep your job !
Final salary schemes are getting quite rare outside the public sector due to the high cost to the employer and a great employee benefit to have . Worth a lot more than some people think .

AnotherJoe

tcallaghan93 said:

AnotherJoe said:

AdmanPea said:

Hi all

I recently started investing for the first time after reading lots of stuff, listening to lots of stuff, and eliminating debt and creating a block of savings. 

I decided to open a Vanguard LifeStrategy 60% and 80% with the idea being that I put £100 a month into each for the next 20 years (possibly increase contributions over time). However, given the current state of the finances in the country and the outlook ahead, is this something I should already alter? I know I'm playing the long game here but I'm also conscious that once reality hits the economy the slump could be devastating for a long, long time. 

What do you think? Keep going as is and it'll ride out okay or tinker with what I'm doing just a few months in to the plan? 

If it's "devastating" for a long time, say 15 years, and you are investing for 20, that means you are buying really cheap for 15 years and will benefit Much more when it recovers than if a vaccine was discovered tomorrow and we all went back to normal next week. So the only change to your plan would be to stop buying 60 and 80 and buy 100. 
An analogy often used here, suppose you often buy dishwasher tablets (or any other long lived item). They are half price at the moment. Do you buy more now, or do you say "I'll wait till they come back to their usual price" ?
Subsidiary point - for a span of 20 years, IMO VLS 70, (which is what you've got) is too cautious and you'd be better off with 80 or 100 though given your worry now  when you should be buying more, maybe that fits your psychology better. 

Second subsidiary point, there are better options than VLS. The "U.K." component, focussed as it is on oil and finance, will drag down performance. 

/
If the OP is new to investing they really shouldn't be thinking about market timing.
Also the bit about VLS has absolutely no evidence behind it.
There are other similar types of funds offered by BlackRock, iShares, Fidelity, HSBC etc. VLS slightly upweights the UK whereas a globalist investor would say a "pure" VLS should be 100% global and so ~5% UK, and a pure domestic investor would say 100% UK is normal.

But they *are* thinking about market timing, (eg changing their strategy) so my response was in regards to that ! 

We can debate til the cows come home what upweight VLS gives to the U.K. (eg, what's the weight of the UK in, say Shell or AstraZeneca) but more concerning to me is that VLS gives a boost to a randomly chosen selection of companies that Just happen to be domiciled here and could change at a whim (especially with Brexit) 

83705628

AnotherJoe said:

tcallaghan93 said:

AnotherJoe said:

AdmanPea said:

Hi all

I recently started investing for the first time after reading lots of stuff, listening to lots of stuff, and eliminating debt and creating a block of savings. 

I decided to open a Vanguard LifeStrategy 60% and 80% with the idea being that I put £100 a month into each for the next 20 years (possibly increase contributions over time). However, given the current state of the finances in the country and the outlook ahead, is this something I should already alter? I know I'm playing the long game here but I'm also conscious that once reality hits the economy the slump could be devastating for a long, long time. 

What do you think? Keep going as is and it'll ride out okay or tinker with what I'm doing just a few months in to the plan? 

If it's "devastating" for a long time, say 15 years, and you are investing for 20, that means you are buying really cheap for 15 years and will benefit Much more when it recovers than if a vaccine was discovered tomorrow and we all went back to normal next week. So the only change to your plan would be to stop buying 60 and 80 and buy 100. 
An analogy often used here, suppose you often buy dishwasher tablets (or any other long lived item). They are half price at the moment. Do you buy more now, or do you say "I'll wait till they come back to their usual price" ?
Subsidiary point - for a span of 20 years, IMO VLS 70, (which is what you've got) is too cautious and you'd be better off with 80 or 100 though given your worry now  when you should be buying more, maybe that fits your psychology better. 

Second subsidiary point, there are better options than VLS. The "U.K." component, focussed as it is on oil and finance, will drag down performance. 

/
If the OP is new to investing they really shouldn't be thinking about market timing.
Also the bit about VLS has absolutely no evidence behind it.
There are other similar types of funds offered by BlackRock, iShares, Fidelity, HSBC etc. VLS slightly upweights the UK whereas a globalist investor would say a "pure" VLS should be 100% global and so ~5% UK, and a pure domestic investor would say 100% UK is normal.

But they *are* thinking about market timing, (eg changing their strategy) so my response was in regards to that ! 

We can debate til the cows come home what upweight VLS gives to the U.K. (eg, what's the weight of the UK in, say Shell or AstraZeneca) but more concerning to me is that VLS gives a boost to a randomly chosen selection of companies that Just happen to be domiciled here and could change at a whim (especially with Brexit) 

/
Your statement that if you buy now, have a bad 15 years, then a good 5 years, therefore you bought cheap over 20 years, is wrong.
It's not random. If you live, work, pay taxes, vote, save and intend to retire in; are subject to the laws of; have savings and investments subject to the regulations and protections of; and  cost of living linked to inflation in the UK, then it makes complete sense to invest the majority of your money in the UK unless there is a very good, legitimate economic reason not to.
UK landlords are not desperately scrabbling to get 95% of their wealth in global property, UK savers are not scrabbling to get 95% of their wealth in global bank accounts, UK SME/private business owners are not scrabbling to buy soy bean farms in China, petrol stations in France, lumber yards in the US or Irish pubs that are actually in Ireland for once.
By your logic, this country is so bad that we should all be trying to become global citizens.

This hysteria and mantra that you HAVE to diversify globally only started in the 80s, it's a fad, a fashion, a trend, there's no real evidence behind it other than slightly lower volatility - but that applies for ALL investors EVERYWHERE, and I don't think that is a valid reason to have a 100% global bias, as you seem to suggest. It's the same for US too.

Your last comment has no validity - every country has current affairs, just google "this time is different". Why invest in the US with an election coming up, Chins/HK with the trade war/crackdown, Europe with the EU breaking apart?

masonic

tcallaghan93 said:

If you live, work, pay taxes, vote, save and intend to retire in; are subject to the laws of; have savings and investments subject to the regulations and protections of; and  cost of living linked to inflation in the UK, then it makes complete sense to invest the majority of your money in the UK unless there is a very good, legitimate economic reason not to.

...such as an economic system that is global by nature.

83705628

masonic said:

tcallaghan93 said:

If you live, work, pay taxes, vote, save and intend to retire in; are subject to the laws of; have savings and investments subject to the regulations and protections of; and  cost of living linked to inflation in the UK, then it makes complete sense to invest the majority of your money in the UK unless there is a very good, legitimate economic reason not to.

...such as an economic system that is global by nature.

/
FTSE 100 earnings are 3/4 global, FTSE 250 1/2 global anyway. You already have a global portfolio. Bingo.

masonic

tcallaghan93 said:

masonic said:

tcallaghan93 said:

If you live, work, pay taxes, vote, save and intend to retire in; are subject to the laws of; have savings and investments subject to the regulations and protections of; and  cost of living linked to inflation in the UK, then it makes complete sense to invest the majority of your money in the UK unless there is a very good, legitimate economic reason not to.

...such as an economic system that is global by nature.

/
FTSE 100 earnings are 3/4 global, FTSE 250 1/2 global anyway. You already have a global portfolio. Bingo.

The FTSE100 is a terribly unbalanced index, which was the point AnotherJoe was making. You'd get a better spread of sectors and industries by buying companies listed on various different stockmarkets rather than limiting yourself to the global companies who have decided to list themselves on the London Stock Exchange. As to the FTSE250, if you have "the majority of your money" in a FTSE250 tracker, then you're adding quite a lot of risk and you'll still have a pretty unbalanced portfolio. Perhaps it's slightly preferable to holding a FTSE100 tracker in its place, but it's still bad investing.