Could my pension be working harder?

zagfles

Rich1976 said:

Prism said:

Rich1976 said:

Prism said:

zagfles said:

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Examples?

Fidelity Index World - 0.12% (developed world)
HSBC FTSE All-World - 0.13%

Legal and General International index 0.08% on HL

Yes but that doesn't include the UK so I skipped it.

You could have a separate UK tracker alongside it for a similar fee.

Indeed, and create your own desired level of "home bias" ! But you'd obviously need to rebalance the two periodically.

DT2001

Deleted_User said

IFAs work if all of the following conditions are met:
1. The investor is completely ignorant
2. The IFA is good
3. There is a lot of money to invest. 

You are not ignorant. You know enough to ask the right questions. And your solution is pretty good. 

I do not agree with 1 above. “A little knowledge can be a dangerous thing”.
In the past I invested in shares directly, tracker funds, options and unit trusts. I personally think I was lucky, with hindsight, to make very good profits overall but within those figures there were some cracking losses. I learnt from those but still feel an IFA can create a strategy to achieve what I require. I think I could get better returns than my IFA however it would need plenty of time to achieve it and probably to take more risks than I should do.
As I’m self employed and am lucky to be able to tailor the amount I do I work on the basis that I do an extra hours work each week to cover my IFA’s fees.
If an IFA helps you achieve your desired retirement income (your number) without the stress that some feel from making investment decisions isn’t that good?

[Deleted User]

Prism said:

zagfles said:

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Examples?

Fidelity Index World - 0.12% (developed world)
HSBC FTSE All-World - 0.13%

HSBC FTSE holds 3165 stocks. That’s fewer than VLS holds in the US alone (3462). HSBC FTSE holds 3.15%  in APPL. Top 6 holdings are US techs, making up 13% of the total. 

Fidelity is even smaller. 1610 holdings. 4.25% in Appl vs 1% VLS holds in APPL. Even more concentrated. Cutting out EM altogether. 

You don’t buy “the world” if you buy these 2 funds. You buy large caps and you are surprisingly concentrated in a small number of stocks. Would have worked great over the last 10 years but small stocks outperform long term. 

These funds are fine; good choice too but not directly comparable to VLS100.  It does cost more to buy emerging markets, small and medium companies worldwide. 

[Deleted User]

DT2001 said:

Deleted_User said

IFAs work if all of the following conditions are met:
1. The investor is completely ignorant
2. The IFA is good
3. There is a lot of money to invest. 

You are not ignorant. You know enough to ask the right questions. And your solution is pretty good. 

I do not agree with 1 above. “A little knowledge can be a dangerous thing”.
In the past I invested in shares directly, tracker funds, options and unit trusts. I personally think I was lucky, with hindsight, to make very good profits overall but within those figures there were some cracking losses. I learnt from those but still feel an IFA can create a strategy to achieve what I require. I think I could get better returns than my IFA however it would need plenty of time to achieve it and probably to take more risks than I should do.
As I’m self employed and am lucky to be able to tailor the amount I do I work on the basis that I do an extra hours work each week to cover my IFA’s fees.
If an IFA helps you achieve your desired retirement income (your number) without the stress that some feel from making investment decisions isn’t that good?

IFA isn’t going to suffer if you run out of money. Your family will. Its your responsibility to take care of yours and your family’s financial success. Whether you use IFA for advice or not, you and you alone are making financial decisions. Your IFA is called an advisor rather than a “decision maker” for a reason. 

You can let him do the research and advise if thats your thing but you need to know enough to evaluate his recommendations and the investment “stress” is all yours either way. An IFA has enough to worry about: he is going to be stressed about having enough high value clients to pay his bills.

PS. I also invested in the past into all sorts of things. I think you can do ok by being an active stock picker but its hard, you need to have unusual personality, its time consuming and psychologically challenging. 

IFAs can be good for special one off services, and you still need to know enough to pick a good one. 

These days, the convenience and cost efficiency of all in one funds/etfs is so good and investing with them is so easy that I  can’t see why anyone would use IFAs for bog standard portfolio services. 

Prism

Deleted_User said:

Prism said:

zagfles said:

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Examples?

Fidelity Index World - 0.12% (developed world)
HSBC FTSE All-World - 0.13%

HSBC FTSE holds 3165 stocks. That’s fewer than VLS holds in the US alone (3462). HSBC FTSE holds 3.15%  in APPL. Top 6 holdings are US techs, making up 13% of the total. 

Fidelity is even smaller. 1610 holdings. 4.25% in Appl vs 1% VLS holds in APPL. Even more concentrated. Cutting out EM altogether. 

You don’t buy “the world” if you buy these 2 funds. You buy large caps and you are surprisingly concentrated in a small number of stocks. Would have worked great over the last 10 years but small stocks outperform long term. 

These funds are fine; good choice too but not directly comparable to VLS100.  It does cost more to buy emerging markets, small and medium companies worldwide. 

I would think that over 3000 holdings will do for many since that is what pretty much all of the world and all world global index funds hold. Vanguard's VWRL has around 3500 holdings - seems comparable. I'm not sure that a 4% allocation to small caps from a global index fund is going to make a lot of difference. Could always go for the Vanguard Global FTSE all cap for 0.23% which doesn't have the UK bias.

VLS 100 is around 2.6% Apple which seems right when you add in the UK weighting. Still concentrated if thats a problem.

[Deleted User]

Prism said:

Deleted_User said:

Prism said:

zagfles said:

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Examples?

Fidelity Index World - 0.12% (developed world)
HSBC FTSE All-World - 0.13%

HSBC FTSE holds 3165 stocks. That’s fewer than VLS holds in the US alone (3462). HSBC FTSE holds 3.15%  in APPL. Top 6 holdings are US techs, making up 13% of the total. 

Fidelity is even smaller. 1610 holdings. 4.25% in Appl vs 1% VLS holds in APPL. Even more concentrated. Cutting out EM altogether. 

You don’t buy “the world” if you buy these 2 funds. You buy large caps and you are surprisingly concentrated in a small number of stocks. Would have worked great over the last 10 years but small stocks outperform long term. 

These funds are fine; good choice too but not directly comparable to VLS100.  It does cost more to buy emerging markets, small and medium companies worldwide. 

I would think that over 3000 holdings will do for many since that is what pretty much all of the world and all world global index funds hold. Vanguard's VWRL has around 3500 holdings - seems comparable. I'm not sure that a 4% allocation to small caps from a global index fund is going to make a lot of difference. Could always go for the Vanguard Global FTSE all cap for 0.23% which doesn't have the UK bias.

VLS 100 is around 2.6% Apple which seems right when you add in the UK weighting. Still concentrated if thats a problem.

Just realized that Vanguard put S&P500 as well as their Total Market fund for the US.  No idea why they would do that as their Total Market fund includes S&P500 stocks. I was wrong with my 1% estimate, there is a bit too much APPL and FAANG in VLS100. 

Prism

Deleted_User said:

Prism said:

Deleted_User said:

Prism said:

zagfles said:

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Examples?

Fidelity Index World - 0.12% (developed world)
HSBC FTSE All-World - 0.13%

HSBC FTSE holds 3165 stocks. That’s fewer than VLS holds in the US alone (3462). HSBC FTSE holds 3.15%  in APPL. Top 6 holdings are US techs, making up 13% of the total. 

Fidelity is even smaller. 1610 holdings. 4.25% in Appl vs 1% VLS holds in APPL. Even more concentrated. Cutting out EM altogether. 

You don’t buy “the world” if you buy these 2 funds. You buy large caps and you are surprisingly concentrated in a small number of stocks. Would have worked great over the last 10 years but small stocks outperform long term. 

These funds are fine; good choice too but not directly comparable to VLS100.  It does cost more to buy emerging markets, small and medium companies worldwide. 

I would think that over 3000 holdings will do for many since that is what pretty much all of the world and all world global index funds hold. Vanguard's VWRL has around 3500 holdings - seems comparable. I'm not sure that a 4% allocation to small caps from a global index fund is going to make a lot of difference. Could always go for the Vanguard Global FTSE all cap for 0.23% which doesn't have the UK bias.

VLS 100 is around 2.6% Apple which seems right when you add in the UK weighting. Still concentrated if thats a problem.

Just realized that Vanguard put S&P500 as well as their Total Market fund for the US.  No idea why they would do that as their Total Market fund includes S&P500 stocks. I was wrong with my 1% estimate, there is a bit too much APPL and FAANG in VLS100. 

It seems like a fairly even choice between VLS 100 and their FTSE Global All Cap depending if someone wants UK bias or not. I hadn't thought about the small cap that you get through VLS with the inclusion of the full US equity index. The other fund in there that stands out is the global ex uk which also has a bunch of US stocks in. It overall looks like it could be a bit simpler but I guess it works.

I like the rest of the VLS range as the fixed allocation between bonds and equities as that saves on manual rebalancing. 

[Deleted User]

Prism said:

Deleted_User said:

Prism said:

Deleted_User said:

Prism said:

zagfles said:

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Examples?

Fidelity Index World - 0.12% (developed world)
HSBC FTSE All-World - 0.13%

HSBC FTSE holds 3165 stocks. That’s fewer than VLS holds in the US alone (3462). HSBC FTSE holds 3.15%  in APPL. Top 6 holdings are US techs, making up 13% of the total. 

Fidelity is even smaller. 1610 holdings. 4.25% in Appl vs 1% VLS holds in APPL. Even more concentrated. Cutting out EM altogether. 

You don’t buy “the world” if you buy these 2 funds. You buy large caps and you are surprisingly concentrated in a small number of stocks. Would have worked great over the last 10 years but small stocks outperform long term. 

These funds are fine; good choice too but not directly comparable to VLS100.  It does cost more to buy emerging markets, small and medium companies worldwide. 

I would think that over 3000 holdings will do for many since that is what pretty much all of the world and all world global index funds hold. Vanguard's VWRL has around 3500 holdings - seems comparable. I'm not sure that a 4% allocation to small caps from a global index fund is going to make a lot of difference. Could always go for the Vanguard Global FTSE all cap for 0.23% which doesn't have the UK bias.

VLS 100 is around 2.6% Apple which seems right when you add in the UK weighting. Still concentrated if thats a problem.

Just realized that Vanguard put S&P500 as well as their Total Market fund for the US.  No idea why they would do that as their Total Market fund includes S&P500 stocks. I was wrong with my 1% estimate, there is a bit too much APPL and FAANG in VLS100. 

It seems like a fairly even choice between VLS 100 and their FTSE Global All Cap depending if someone wants UK bias or not. I hadn't thought about the small cap that you get through VLS with the inclusion of the full US equity index. The other fund in there that stands out is the global ex uk which also has a bunch of US stocks in. It overall looks like it could be a bit simpler but I guess it works.

I like the rest of the VLS range as the fixed allocation between bonds and equities as that saves on manual rebalancing. 

HSBC FTSE All World is tracking a 4000 stock index with just over3000 stocks.  Wonder if it has any companies from FTSE SmallCap.  Seems to be tracking well so far though.

Very curious why Vanguard decided to include three overlapping funds for the US in VLS. Thats not what they do for one stop funds in N America. Must be something to do with costs and/or taxes but looks weird. 

AlanP_2

I suspect that many people use an IFA because they find it all too confusing and lack confidence to DIY so just go with the flow.

They may or may not get better returns compared to an alternate reality but they will never know and to be honest probably don't care.  

DT2001

Deleted_User said:

 

IFA isn’t going to suffer if you run out of money. Your family will. Its your responsibility to take care of yours and your family’s financial success. Whether you use IFA for advice or not, you and you alone are making financial decisions. Your IFA is called an advisor rather than a “decision maker” for a reason. 

You can let him do the research and advise if thats your thing but you need to know enough to evaluate his recommendations and the investment “stress” is all yours either way. An IFA has enough to worry about: he is going to be stressed about having enough high value clients to pay his bills.

PS. I also invested in the past into all sorts of things. I think you can do ok by being an active stock picker but its hard, you need to have unusual personality, its time consuming and psychologically challenging. 

IFAs can be good for special one off services, and you still need to know enough to pick a good one. 

These days, the convenience and cost efficiency of all in one funds/etfs is so good and investing with them is so easy that I  can’t see why anyone would use IFAs for bog standard portfolio services. 

An IFA earns more if his client’s portfolios are worth more. His/her business will thrive if getting new business by recommendation. Our interests coincide.

I have set out my requirements to my IFA and he has built a strategy to achieve them. We check our progress regularly and as long as we are still on the right road I’ll let him carry on with little interference. I ask questions from my relatively limited knowledge.
I have not abdicated responsibility for my financial well-being I have just delegated control of part of it to a paid professional.

When you and a few others state how simple it is and then a thread veers off into SWRs, Guyton Klinger, définitions of sector, portfolio rebalancing, bond ladders, EFTs etc etc it implies that  our (not DIY ers) knowledge is severely lacking. 

What is your objective? Mine are to achieve a level of guaranteed income to cover ‘basic’ requirements (which I’ve done with small DB’s and ensuring full SP when it is paid) and then to have the natural income from our investments to fund luxuries whilst preserving capital. I have made my financial decisions at that level not which fund to invest in or what mix of assets.