Passive Investing for a beginner

_theinsider

dunstonh said:

I wanted to just stick with ETFs, and just add to the 3 I have invested in (S&P, FTSE All world, FTSE 250).

So, you are not really a passive investor as you are making management decisions on how to deviate from a pure global tracker.

What dunstonh said. If you want a purely passive approach, set your account to buy £500 of VWRL each month. Come back in 10 or 20 years and see what you've got   

JohnWinder

It started about 'passive investing'; an active investor could do some passive investing maybe?

To be a purist, would one only buy a world equity tracker as a passive investor when that ignored the bond market?

How many angels can dance on the head of a pin?

Thrugelmir

A multi asset fund may offer a better approach if you are seeking a passive investment. Your portfolio would then be far more diversified. With rebalancing performed for you. 

Linton

Marcusian said:

Linton said:

Marcusian said:

Linton said:

You say you are building a pot for a rainy day.  Before you think about investing you should have several months living expenses in cash.  You dont want  the rainy day to arrive and you to find that your pot has dropped significantly in value thanks to poor economic confditions.

Once the emergency pot is in place then you can sensibly comsider long term investing.  But remember this is for the long term, certainly more than 5 years and preferably more than 10.  Dont plan on cashing it in earlier.

With those caveats in principle what you are doing seems sensible.  Though buying 3 funds out of £500/month will lead to excess charges, better to put it all in one fund each month, switching from time to time.  I do not think having an S&P500 fund makes much sense.  FTSE All World is 50-60% US anyway.

As to drip feeding - on average you will make more money by investing the money as soon as you have it, a delay will cost you.  However what actually happens may not be average. So you could rationally choose either way.

A final warning - at some stage in the next say 5 years you must be prepared for a major fall in share prices, perhaps 40%.  It is important that you dont panic and sell out because that will make your loss real.  Better to stay invested as prices will recover.  You should continue paying in your £500/month.  If you think a crash will really spook you look to investing more safely - options for doing this are available.

Thank you for this, some food for thought. I am going to keep aside a few grand rainy day money, so I think it wise to just keep my cash savings i have no for this purpose. 

So what you are saying is that each month put my 500 in one of those ETFs? then the next month 500 in the other one? or purely focus on one ETF full stop?

Yes to only buying one ETF per month. The FTSE All World would be fine on its own but the FTSE250 fund will give a bit of extra spice.  Probably best to have most of your money in the All World fund and perhaps less than 20% in the FTSE250.;

So in February buy 500 of FTSE All world, march 500 of  FTSE250 for example? then repeat. 

can i ask why not the S&P 500? I get the all world has alot of USA stocks in it, but I always assumed it was a standard type of investment for me in terms of steady/passivity. 
Thanks so much for the help too. 

You need to look at the underlying assets.  Most of the value of the US companies held by the FTSE All World Index fund will also be held by the S&P500 fund and vice versa.  So by buying the S&P500 fund you are just adding more of the same.  Why do you want a FTSE Allworld Index fund with even more US in it?  One normally adds a fund alongside a World Index fund to include something different or to increase the % of some niche area.  

Marcusian

_theinsider said:

dunstonh said:

I wanted to just stick with ETFs, and just add to the 3 I have invested in (S&P, FTSE All world, FTSE 250).

So, you are not really a passive investor as you are making management decisions on how to deviate from a pure global tracker.

What dunstonh said. If you want a purely passive approach, set your account to buy £500 of VWRL each month. Come back in 10 or 20 years and see what you've got   

This is what i am going to do. Thanks