Investing large sum in world tracker fund

Consideredspender

Hi all,

I've got circa £300,000 (which I won't need for another 15 years or so) to invest in the markets in a passive world tracker fund and I was hoping to seek the guidance of you wise investors. 

I have 3 conundrums:

1. Should I invest in a single contribution or dollar average, and if so, over what period. I don't want to badly time the market, so a single contribution is open to deep regrets. Likewise, the markets seem to be on the move and i don't want to miss out on the opportunity cost. I was thinking of contributing over between 4 and 6 months?

2. I like the vanguard funds. The accumulating all world tracker etc (vwrp?) seems a good choice and has a fairly competitive off of 0.22. however, I gather a blend of their developed world and emerging markets funds with a 90/10 split could supply very similar diversification for a combined of 0.14. I want simplicity and low maintenance, so what should i go for. I guess it boils down to the ongoing work and stress involved in rebalancing...

3. I have about 50k in cash ISAs already, which I plan to transfer in to a S&S ISA. I will then top this up with this year's, and perhaps next year's allowances; so 90k in an ISA. i no longer work (I am a live-in volunteer in a spiritual centre) so I gather I can't put more than circa 3k away in a SIPP. As such, am I right in thinking a general investment account is my best way forward (and thus have to deal with self assessment in the shirt termnand CGT in the long)?

3. Which broker/s should i use. Given the amount, Vanguard annual holding fees are prohibitive. HL seem well regarded and charge £45 a year for holding. Although their dealing charge is £12 per transaction. What are others experiences with HL, or perhaps other brokers you would recommend for my situation. And would people consider splitting the monies between 2 brokers for FSCS cover safety?

To add to all this, I'm 44 and own a house and have ther funds that I've set aside for living worry-free on.

I would really appreciate your experienced inputs on these questions. I've read a number of investment books and read around the internet forums and feel I mostly know what I'm doing, but there is a lot at stake and thus I won't to give the decision due diligence.

Many thanks.
Kind regards.

tacpot12

My hope is that stock markets will not fall further, but this does not mean that stock markets will not fall further. Therefore spreading your investment over a number of months might produce a better result than investing everything immediately, but I do wonder if the difference will be material, given that you are planning to invest for 15 years. 

A low cost global equity tracker, such a VWRP, would be a good choice. You're right that the choice between a single fund or multiple funds is as much about the stress and responsibility, vs. your view as to whether the single fund is going to perform as well as multiple funds. I am inclined to think that a single fund will be more than adequate. 

I wouldn't bother splitting funds between two brokers unless you need income, which you don't. 

You will have to invest in a GIA once your ISA limit is used, and will have pay CGT via self-assessment. You can move investments in a GIA to your ISA each year as the ISA limits allow. remember you have a CGT allowance each year, so it is possible to sell just enough shares so that the profit you realise will remain within your CGT allowance. Check if HL allow an in specie transfer from their GIA to their ISA. 

Malthusian

1. Should I invest in a single contribution or dollar average, and if so, over what period. I don't want to badly time the market, so a single contribution is open to deep regrets. Likewise, the markets seem to be on the move and i don't want to miss out on the opportunity cost. I was thinking of contributing over between 4 and 6 months?

Would you have deep regrets if you drip fed the money in over 6 months and then in May the next big crash hit, to the point of panicking and cashing in at a loss?

If yes, you shouldn't invest at all. If no, why is a crash in 7 months' time so different from a crash tomorrow? (Or in 14 months' time, or 3 years, or...)

2. I like the vanguard funds. The accumulating all world tracker etc (vwrp?) seems a good choice and has a fairly competitive off of 0.22. however, I gather a blend of their developed world and emerging markets funds with a 90/10 split could supply very similar diversification for a combined of 0.14. I want simplicity and low maintenance, so what should i go for.

This sounds like a case of answering your own question to me.

It doesn't sound like you have a problem with undervaluing your own time if you spend your life volunteering.

3. I have about 50k in cash ISAs already, which I plan to transfer in to a S&S ISA. I will then top this up with this year's, and perhaps next year's allowances; so 90k in an ISA. i no longer work (I am a live-in volunteer in a spiritual centre) so I gather I can't put more than circa 3k away in a SIPP. As such, am I right in thinking a general investment account is my best way forward (and thus have to deal with self assessment in the shirt termnand CGT in the long)?

From the sound of it, yes. Bear in mind that you have your personal allowance and starting rate band to use against the non-ISA income, and you can realise up to £12,300 of gains (at current rates) per year without capital gains tax. You can keep moving £20,000 a year into the ISA, making it increasingly less likely that you will have a tax issue on non-ISA funds.

And would people consider splitting the monies between 2 brokers for FSCS cover safety?

If you're using a big, well-known broker like HL or Vanguard, it's pointless.

Albermarle

Would you have deep regrets if you drip fed the money in over 6 months and then in May the next big crash hit, to the point of panicking and cashing in at a loss?

This is the most important point in my view . 

Although you have secure income and your own home , it is quite a step to put such a large sum of money into 100% equities.

It might well be the correct thing to do in pure investing terms , but what would you really feel if it lost 25% in a week and the TV news was screaming out doom and gloom with the prospects of it going down well over £100K . Would you really be OK with that ? or would you start to panic and have sleepless nights ? ( I probably would ) 

Thrugelmir

Why invest in just a passive world tracker?  

csgohan4

Thrugelmir said:

Why invest in just a passive world tracker?  

to be fair, new investors would do well with passive trackers until they feel more comfortable and indeed taking more risks with active funds and different funds. 

Another_Saver

Consideredspender said:

Hi all,

I've got circa £300,000 (which I won't need for another 15 years or so) to invest in the markets in a passive world tracker fund and I was hoping to seek the guidance of you wise investors. 

I have 3 conundrums:

1. Should I invest in a single contribution or dollar average, and if so, over what period. I don't want to badly time the market, so a single contribution is open to deep regrets. Likewise, the markets seem to be on the move and i don't want to miss out on the opportunity cost. I was thinking of contributing over between 4 and 6 months?

2. I like the vanguard funds. The accumulating all world tracker etc (vwrp?) seems a good choice and has a fairly competitive off of 0.22. however, I gather a blend of their developed world and emerging markets funds with a 90/10 split could supply very similar diversification for a combined of 0.14. I want simplicity and low maintenance, so what should i go for. I guess it boils down to the ongoing work and stress involved in rebalancing...

3. I have about 50k in cash ISAs already, which I plan to transfer in to a S&S ISA. I will then top this up with this year's, and perhaps next year's allowances; so 90k in an ISA. i no longer work (I am a live-in volunteer in a spiritual centre) so I gather I can't put more than circa 3k away in a SIPP. As such, am I right in thinking a general investment account is my best way forward (and thus have to deal with self assessment in the shirt termnand CGT in the long)?

3. Which broker/s should i use. Given the amount, Vanguard annual holding fees are prohibitive. HL seem well regarded and charge £45 a year for holding. Although their dealing charge is £12 per transaction. What are others experiences with HL, or perhaps other brokers you would recommend for my situation. And would people consider splitting the monies between 2 brokers for FSCS cover safety?

To add to all this, I'm 44 and own a house and have ther funds that I've set aside for living worry-free on.

I would really appreciate your experienced inputs on these questions. I've read a number of investment books and read around the internet forums and feel I mostly know what I'm doing, but there is a lot at stake and thus I won't to give the decision due diligence.

Many thanks.
Kind regards.

1. Statistically, lump sum beats drip feed about 2/3 of the time. If you are going to average it in, do it automatically not manually i.e. setup an automatic regular contribution, prevents emotions getting in the way.

2. That fund choice is fine, I think the HSBC one is cheaper.
3. Covered above, besides which a good broker should be able to help with it in some way but I'm not rich enough to know about that (yet).
4. iWeb would be even cheaper.
5. ... There's no harm using multiple brokers other than slightly higher costs. If splitting it 3-4 ways by platform and fund makes you feel more secure than go for it 🤷‍♂️ . It's a valid concern, some people might call it overly cautious but it's your money.

Malthusian

Albermarle said:

Although you have secure income and your own home , it is quite a step to put such a large sum of money into 100% equities.

That was a point I should have picked up on as well. Wanting to drip feed funds into the market (which doesn't actually achieve anything) and then end up with 100% equities without any other asset classes to reduce volatility doesn't compute.

Drip-feeding only reduces stress and the risk of panicking and cashing in for the first six months. Diversifying among other asset classes reduces stress and the risk of panicking and cashing in permanently. (At the cost of a relatively minor loss in potential growth, but TANSTAAFL.)

If you have the gumption to invest in 100% equities the same quality should be driving you to whacking it all into the market now before it recovers any further. If the idea of that makes you nervous, why 100% equities and the possibility of seeing your £300,000 turn into £180,000 or lower before it eventually recovers?

Alexland

Consideredspender said:

2. I like the vanguard funds. The accumulating all world tracker etc (vwrp?) seems a good choice and has a fairly competitive off of 0.22. however, I gather a blend of their developed world and emerging markets funds with a 90/10 split could supply very similar diversification for a combined of 0.14. I want simplicity and low maintenance, so what should i go for. I guess it boils down to the ongoing work and stress involved in rebalancing...

The HSBC FTSE All World accumulation fund includes the circa 10% EM and is only 0.13% pa with no need to rebalance. If you expected to find rebalancing a few units between funds stressful how do you expect to cope with the stock market volatility of a 100% equities investment? Would you be happier with a more diversified multi asset fund which would be less volatile and not crash as badly?

Consideredspender said:

3. Which broker/s should i use. Given the amount, Vanguard annual holding fees are prohibitive. HL seem well regarded and charge £45 a year for holding. Although their dealing charge is £12 per transaction. What are others experiences with HL, or perhaps other brokers you would recommend for my situation. And would people consider splitting the monies between 2 brokers for FSCS cover safety?

If this is a general investment account or ISA consider iWeb (run by Halifax) who have no ongoing charge for holding funds or ETFs. Might also be worth spreading into another provider with fixed fees (eg. Interactive Investor) or who caps for holding ETFs (AJ Bell, HL, Fidelity, etc) although remember there is no FSCS protection on an ETF.

Alex

Thrugelmir

csgohan4 said:

Thrugelmir said:

Why invest in just a passive world tracker?  

to be fair, new investors would do well with passive trackers until they feel more comfortable and indeed taking more risks with active funds and different funds. 

My comment was directed at the lack of diversity. Not the choice of a passive fund. A single investment such as a Global Tracker is going to be highly correlated. 

Sailtheworld

Barring a windfall nobody gets cash savings of £350k(?) without a long term commitment to saving rather than investing. Seems like a huge change in attitude to risk.

To my mind there's no difference between investing in one go or over 4 months - the money will be invested in short order. It comes down to those feelings of regret - there would be nothing wrong with setting up a monthly standing order for £5k and taking 5 years to move the cash.

I'd use the cheapest combination of all world fund / etf & broker though - no point giving it away. I'd still fund a SIPP as much as possible and make sure I used up all ISA allowance.

I might also invite the spiritual centre to pay me for my services (or get a job for a while) to increase the potential for pension contributions.