Retirement planning newbie - any help gratefully received

mark55man

It's easy to try and be too sophisticated - growing a retirement pot is about 3 things (not that I have always done, but I wold have been better off if I did)
* Economical lifestyle / Aggressive saving (lots of articles about FIRE - financial independence retire early - eg Mr Mustache (seriously) - I like the escape artist series of blogs)
* Asset allocation - typically equity versus bonds but as Mordko says this early you have plenty of time to recover, and if the market does take a year to recover from a fall, then you have a year of cheaper purchases.  Capital protection is never unimportant, but foregoing growth by being too conservative can be as bad.  My recent favorite asset allocation site is https://portfoliocharts.com/insights/ which contains many of the portfolios discussed in the reading list above - including some surprising - may take a little bit of reading first before you can appreciate it
* Cost reduction - 1% fees on a fund  may not sound a lot but if its 1% for 33 years thats 33% of your pot.  If you are paying for active management to get extra growth then fine but THAT IS OFTEN A FICTION   (sorry for shouting).  Passive - tracking funds like the Vanguard Lifestrategy series (@80% or 100%) or some of HSBC trackers are like 0.2% (for the fund) and depending on your pot different holding platforms will give you the best value - plenty of articles on here, on thelemonfool.co.uk or monevator.com if you prefer blog style reading


Good luck - you are in the right place, and any technical queries or head-straightening questions usually get answered pretty quickly here     

MK62

mark55man said:

* Cost reduction - 1% fees on a fund  may not sound a lot but if its 1% for 33 years thats 33% of your pot.  If you are paying for active management to get extra growth then fine but THAT IS OFTEN A FICTION  

....and almost as often it's not......

[Deleted User]

MK62 said:

mark55man said:

* Cost reduction - 1% fees on a fund  may not sound a lot but if its 1% for 33 years thats 33% of your pot.  If you are paying for active management to get extra growth then fine but THAT IS OFTEN A FICTION  

....and almost as often it's not......

Active funds underperform passive over significant periods of time in the vast majority of cases.  Particularly expensive ones, charging 1% (charges have been going down in some jurisdictions).  Random Walk explains why. 

mark55man

here's a recent one, interesting view on the three main types of risk - namely inflation, permanent capital loss and volatility.  and how of the three only volatility can be your friend

I love the turkey graph - been there and  its not pleasant

https://theescapeartist.me/2020/12/06/the-ice-sculpture-the-turkey-and-the-rollercoaster/

Lady1981

mark55man said:

here's a recent one, interesting view on the three main types of risk - namely inflation, permanent capital loss and volatility.  and how of the three only volatility can be your friend

I love the turkey graph - been there and  its not pleasant

https://theescapeartist.me/2020/12/06/the-ice-sculpture-the-turkey-and-the-rollercoaster/

Thanks @mark55man. Very much trying to avoid a turkey! Definitely realising I just need to buckle up and hop on the rollercoaster!

MK62

Deleted_User said:

MK62 said:

mark55man said:

* Cost reduction - 1% fees on a fund  may not sound a lot but if its 1% for 33 years thats 33% of your pot.  If you are paying for active management to get extra growth then fine but THAT IS OFTEN A FICTION  

....and almost as often it's not......

Active funds underperform passive over significant periods of time in the vast majority of cases.  Particularly expensive ones, charging 1% (charges have been going down in some jurisdictions).  Random Walk explains why

We'll have to disagree on that......it may be the case over on that side of the Atlantic, but it's not so clear cut over here.

[Deleted User]

MK62 said:

Deleted_User said:

MK62 said:

mark55man said:

* Cost reduction - 1% fees on a fund  may not sound a lot but if its 1% for 33 years thats 33% of your pot.  If you are paying for active management to get extra growth then fine but THAT IS OFTEN A FICTION  

....and almost as often it's not......

Active funds underperform passive over significant periods of time in the vast majority of cases.  Particularly expensive ones, charging 1% (charges have been going down in some jurisdictions).  Random Walk explains why

We'll have to disagree on that......it may be the case over on that side of the Atlantic, but it's not so clear cut over here.

Yes, we’ll have to agree to disagree. https://www.evidenceinvestor.com/active-versus-passive-in-europe-is-no-contest/

MK62

Interesting.......looks good......but doesn't really tally with the data available for funds domiciled in the UK (or else easily accessible for a UK based investor).....

Figures for real, accessible (to UK investors) funds are available at Trustnet, FT, and even Morning Star, and they paint a rather different picture.....

In the Europe (ex-UK) sector, for example, there are 74 OEIC/UTs with a 10 year history.........it appears that 40 funds have generated better returns than the highest ranked index fund (HSBC European Index) over that 10 year period......

https://www.trustnet.com/fund/price-performance/o/ia-unit-trusts?tab=myCustomTab&sector=O%3AEUREXUK&pageSize=75&sortby=P120m&sortorder=desc

However, we are hijacking this thread, so perhaps this debate is for another time.......