cash LISA + fund investment for retirement?

Alexland

TheLittleSaver said:
He mentioned past performance as one of the reasons not to pick AJB Global Growth Fund, but if there is one think I see all over investment platforms and websites is something like "past performance is not an indicator of future performance".

While you shouldn't rely on past positive performance you have to be concerned when a fairly new fund has done a poor job capturing below market return. It's not like it is investing in an area of the market that is known to be doing badly (so for example the manager might have performed well in their sector or geographic constraints). Anyway that's the problems with active funds you need to keep jumping around trying to second guess which manager will do well next. That's why many of us prefer a more passive well diversified approach to get consistent good but not ever stunning performance.

TheLittleSaver

cloud_dog said:

There are a number of decent financial commentators, Lard Kroijer being one.  His book Investing Demystified is also a useful read.

He has Youtube channel you may find useful to start with... https://www.google.com/url?sa=t&source=web&rct=j&url=https://m.youtube.com/watch?v=gM4KEJQ_Z5U&ved=2ahUKEwikn6y4uvDtAhUrVRUIHWURAy4QwqsBMAB6BAgBEAM&usg=AOvVaw0lEImAWGUdLxHhoqKF279I

That's very helpful, thanks!

Alexland said:

While you shouldn't rely on past positive performance you have to be concerned when a fairly new fund has done a poor job capturing below market return. It's not like it is investing in an area of the market that is known to be doing badly (so for example the manager might have performed well in their sector or geographic constraints). Anyway that's the problems with active funds you need to keep jumping around trying to second guess which manager will do well next. That's why many of us prefer a more passive well diversified approach to get consistent good but not ever stunning performance.

Fair enough, I've learned one more thing. Thanks Alexland.

TheLittleSaver

oh, one more thing!

What would you use as a regular source of news about the market?

I am aware the generally you shouldn't rely on what articles say about this or that share/bond/fund/whatever, but I guess staying informed is good anyway? Do you guys try to stay updated on a daily basis, or weekly, etc..?

Alistair31

TheLittleSaver said:

oh, one more thing!

What would you use as a regular source of news about the market?

I am aware the generally you shouldn't rely on what articles say about this or that share/bond/fund/whatever, but I guess staying informed is good anyway? Do you guys try to stay updated on a daily basis, or weekly, etc..?

If you are invested sensibly and suitably there should be no need to follow market “noise”. What is your reaction going to be if you see, for example, Apple shares decline 20% and it forms 0.5% of your overall well balanced fund. It should be nothing. 

Alexland

Alistair31 said:

If you are invested sensibly and suitably there should be no need to follow market “noise”. What is your reaction going to be if you see, for example, Apple shares decline 20% and it forms 0.5% of your overall well balanced fund. It should be nothing. 

But then Apple isn't 0.5% of your fund it's around 3.5% of a global tracker (or maybe 2% of a balanced 60/40 fund) up from around 2% a year or two ago. Similar story with the other 2 top holdings Microsoft at 3% and Amazon at 2.5%. With our proportion of Apple shares I could go out and buy a new car or two.

So while for a beginner the standard answer of a global tracker providing plenty of equity diversification is still true (and better than many other options they might choose) if you dig deeper you see that it might be possible to achieve better diversification for a smoother ride by being 'mostly passive' rather than strictly following the cap-weighted approach. Still that's not nearly as easy and carries other risks for no certain benefit so might be a matter for another thread.

TheLittleSaver

Understood. Thanks all for the exhaustive responses.

I guess now it's time to open a LISA! ahahah