Investing large sum in world tracker fund

Consideredspender

Alexland said:

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

Thanks for all your comments! I will definitely consider the other providers. I didn't know ETFs received no FSCS protection :-(

Consideredspender

csgohan4 said:

if your risk averse, max out your premium bonds and look for the best savings account in the meantime. 

Otherwise the rest of us are investing in Stocks  and shares in a tax wrapper to inflation proof our savings, however to do so wisely in index tracker funds which have a track record, not stellar but will almost guarantee you will more than you put in

Some are more adventurous and add in sectors/ geography to diversify their investments or even dabble in individual shares

Thanks! As I've said earlier, although I'd prefer not to take risk, I feel my hands are tied and thus i need to. With that said, does my suggested approach sound like what you would consider doing?

Consideredspender

tiengomar said:

You should also consider future wealth taxes as the government will be looking at wherever it can find money to plug the massive holes caused by Covid related policies. Maybe a way out of this is to invest more in pensions? Assuming of course that the futyure Treasury attack will spare pension pots....

Thanks. Although I get the impression that pension pots - being large and captive - may be a bigger target. Who knows :-(

Consideredspender

Consideredspender said:

Another_Saver said:

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.

Very sagelike responses. Many thanks! I will factor them in to my plans.

Consideredspender said:

Another_Saver said:

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.

Very sagelike responses. Many thanks! I will factor them in to my plans.

Sorry, I forgot to comment on your suggestion of the HSBC fund. I gather a couple of things that put me off this one a little: a) it updates it's holdings less frequently than vanguard, so it doesn't track as.accurately. b) it's not market traceable - I can't recall the term for these funds - and thus will incur a larger holding fee with most brokes - which could in turn negate the lower off.
Thanks!

AnotherJoe

Consideredspender said:

csgohan4 said:

if your risk averse, max out your premium bonds and look for the best savings account in the meantime. 

Otherwise the rest of us are investing in Stocks  and shares in a tax wrapper to inflation proof our savings, however to do so wisely in index tracker funds which have a track record, not stellar but will almost guarantee you will more than you put in

Some are more adventurous and add in sectors/ geography to diversify their investments or even dabble in individual shares

Thanks! As I've said earlier, although I'd prefer not to take risk, I feel my hands are tied and thus i need to. With that said, does my suggested approach sound like what you would consider doing?

That's an untenable position.  Yes, doing X carries a risk.  But so does not doing X. 

You take a risk every time you cross the road, but there's a risk to not crossing the road also.  Putting your money in savings isn't risk free, indeed it carries more than a risk but a virtual certainty your money will lose value.that may be an acceptable outcome, or it may not, depends how much money you have.

AnotherJoe

Consideredspender said:

Alexland said:

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

Thanks for all your comments! I will definitely consider the other providers. I didn't know ETFs received no FSCS protection :-(

Such protection (say that you might get with a fund) is pretty much an illusion, in that it's highly unlikely to be of use since the circumstances under which it would come into play would be very obscure and unlikely. 

Alexland

I don't know where you got the comparable information and resulting conclusion about the holding trades causing extra tracking error (?) or understand your comment about traceability affecting platform charges (maybe this is a reference to capping for exchange tradeable assets?) but if you put the HSBC FTSE All World fund against the Vanguard All World ETF into the Trustnet Charting Tool you can see there is no performance problem with the HSBC fund and over various time periods it's doing better than the Vanguard ETF by slightly more than the difference in charges although some of this may be down to valuation points in the day. There is no problem finding it or additional charges for trading or holding it on iWeb, Interactive Investor, etc.
Sure in any given year its very unlikely you would need to call upon the FSCS protection of a fund but over enough decades of investment it's a possibility so worth being aware of. That doesn't stop us investing in ETFs but given the choice I would rather have a fund especially if it's cheaper so likely to perform better.

Thrugelmir

Consideredspender said:

Thruglemere:
To answer your question:
Because my research has led me to understand that index trackers on average outperform managed funds AND the world seems a nice broad diversification within the stocks asset class AND it makes sense to me that there is always a part of the world growing AND it gets my investment out of the British economy, which I sadly lack faith in. Does this make sense? You may pick up me having read Andrew Craig's Own the World :-:smile:

And thanks for your comment!

Personal opinions and decisions drive individual markets up and down. The UK markets are throwing up interesting opportunities thanks to the boycott by so many. 

Consideredspender

steampowered said:

If you are concerned about short term drops, perhaps you could consider putting most of your money into an equity fund and a portion (perhaps 30%) into a bond fund?

Or selecting a multi-asset fund rather than a 100% equity fund?

That will reduce your likely returns, but will also reduce your likely volatility.

You can rebalance into higher equity exposure over time. It makes sense to increase equity exposure as markets drop, and reduce it as they rise, though you can never be sure whether you are calling it right or not.

Logically, short term drops are nothing to be worried about when you are investing for a 15 year time scale, but they can be challenging emotionally.

Many thanks for your comments. I do like the idea of a gradual exposure to the markets in order to mitigate timing woes. What I didn't say earlier was that I got the impression bond returns were very poor at the moment (investment grade, anyway) and thus that is why I was largely staying away from them and just plumping for cash. I was led to believe the old school split between equities and bonds was something that worked well many years ago when bonds paid a decent return, but was less realistic an option nowadays. Do I miss understand this? 

Consideredspender

Alexland said:

I don't know where you got the comparable information and resulting conclusion about the holding trades causing extra tracking error (?) or understand your comment about traceability affecting platform charges (maybe this is a reference to capping for exchange tradeable assets?) but if you put the HSBC FTSE All World fund against the Vanguard All World ETF into the Trustnet Charting Tool you can see there is no performance problem with the HSBC fund and over various time periods it's doing better than the Vanguard ETF by slightly more than the difference in charges although some of this may be down to valuation points in the day. There is no problem finding it or additional charges for trading or holding it on iWeb, Interactive Investor, etc.
Sure in any given year its very unlikely you would need to call upon the FSCS protection of a fund but over enough decades of investment it's a possibility so worth being aware of. That doesn't stop us investing in ETFs but given the choice I would rather have a fund especially if it's cheaper so likely to perform better.

Thanks for your reply! 
Sorry, I don't recall where I read about tracking error. However, it makes intuitive sense to me that if a fund performs its 'syncing up' with the index it tracks less frequently, then it will track less accurately. Now, I guess sometimes this may result in better gains than the index but on the flip side at other times it will perform worse. Perhaps in relatively stable markets this small difference may not be worth worrying about?

Re the extra costs for holding funds, yes, sorry I meant that providers such as HL cap ETF holding fees at a very reasonable figure, but continue to charge 0.45% for funds. I will look into iweb and II. 

Points noted re FSCS protection. A fund does sound like it provides a worthwhile extra level of security. 

Thanks again!