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Hi, new here and hoping you guys can steer me in the right direction.
Basically I have a £5000 lump sum and around £400 per month to invest. Happy to tie this in for 10 years. Had a look around the various threads and pretty much not sure where to start with it. I am not looking to spend too much time on it and would prefer an "off the shelf" option. My risk appetite is probably around 40%. So far, from reading other posts, I am thinking that maybe a S&S ISA. Having viewed a similar thread I followed a link to Vanguard's Life Strategy option which looks like it could tick most of my boxes. However you don't know what you don't know and there may be a much better option for me. What would you do with it?
Great forum.
Thanks for the advice.
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Comments

  • dunstonh
    dunstonh Posts: 119,603 Forumite
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    My risk appetite is probably around 40%. 

    If you mean you are accepting of around 40% losses in a 12 month period then 80-90% equity would be fine.

    What would you do with it?

    If you are going to spend all the money in 10 years time then you really should consider phasing risk down.  If you dont intend to be proactive with the investing then you should consider lower risk or using an automatic risk reduction investment.


    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • MaxiRobriguez
    MaxiRobriguez Posts: 1,783 Forumite
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    edited 10 March 2021 at 4:27PM
    A S+S ISA is an investment wrapper, not an investment. The investments (like the VLS range you've looked at) would go in the S+S ISA.

    I suspect most on here will say "VLS 20" for a low/medium risk appetite off the shelf investment option-  but whether that's any less risky than say VLS100 given where we are with low interest rates remains to be seen. Ultimately lots of assets are expensively priced and it's quite hard to buy off the shelf options that in the past would balance each other out nicely. Even VLS20 might need swings of 20%... are you OK with that?

    Other thing to consider is to push more money into your pension wrapper rather than a S+S ISA. You get to avoid tax on the way in with pensions (avoid tax on the way out with S+S ISA), and it's better to avoid it on the way in as it means more investment growth on a bigger starting chunk of money. You may not be able to pick VLS' in your pension wrapper but there's other things available. If you have a work scheme and they offer salary sacrifice then even better as you can avoid NI as well as the income tax.
  • Steve182
    Steve182 Posts: 623 Forumite
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    Since you are willing to accept losses of up to 40% you could also consider higher risk equity investments for a proportion of your pot, such as -

    Scottish Mortgage Investment Trust, or pretty much anything else from the Baillie Gifford stable
    Lindsell Train Global Equity
    Lindsell Train Investment Trust
    Fundsmith Equity
    Smithson Investment Trust

    All can be kept in a S & S ISA




     
    “Like a bunch of cod fishermen after all the cod’s been overfished, they don’t catch a lot of cod, but they keep on fishing in the same waters. That’s what’s happened to all these value investors. Maybe they should move to where the fish are.”   Charlie Munger, vice chairman, Berkshire Hathaway
  • MaxiRobriguez
    MaxiRobriguez Posts: 1,783 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    I don't read 40% risk tolerance as 40% losses acceptable, but a risk tolerance on a 0-100% scale whereby 0% is cash and 100% is highly leveraged dogecoin.

    Would be good if the OP can confirm as the advice given will vary massively depending...
  • eskbanker
    eskbanker Posts: 36,944 Forumite
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    I don't read 40% risk tolerance as 40% losses acceptable, but a risk tolerance on a 0-100% scale whereby 0% is cash and 100% is highly leveraged dogecoin.

    Would be good if the OP can confirm as the advice given will vary massively depending...
    OP also refers to LifeStrategy so could be self-assessing a risk tolerance equivalent to VLS40....
  • Steve182
    Steve182 Posts: 623 Forumite
    Fourth Anniversary 500 Posts Photogenic Name Dropper
    edited 10 March 2021 at 6:43PM
    Steve182 said:
    Since you are willing to accept losses of up to 40% you could also consider higher risk equity investments for a proportion of your pot, such as -

    Scottish Mortgage Investment Trust, or pretty much anything else from the Baillie Gifford stable
    Lindsell Train Global Equity
    Lindsell Train Investment Trust
    Fundsmith Equity
    Smithson Investment Trust

    All can be kept in a S & S ISA




     
    For what it's worth Fundsmith Equity actually has a lower Trustnet risk score than VLS100.
    71 For Fundsmith, 81 for VLS100 
    Fundsmith also had a much higher 5 year return.
    “Like a bunch of cod fishermen after all the cod’s been overfished, they don’t catch a lot of cod, but they keep on fishing in the same waters. That’s what’s happened to all these value investors. Maybe they should move to where the fish are.”   Charlie Munger, vice chairman, Berkshire Hathaway
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    My risk appetite is probably around 40%. 
    Would being 40% down when you need the money in 10 years time be an issue? 
  • Alexland
    Alexland Posts: 10,183 Forumite
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    edited 10 March 2021 at 7:12PM
    Steve182 said:
    For what it's worth Fundsmith Equity actually has a lower Trustnet risk score than VLS100.
    Last time I checked the Trustnet risk score only considers the previous 36 months of volatility so might not represent what might happen to growth funds in the event we see a sustained style rotation (as can happen in the middle of a super cycle). Even 'safe' assets get risky if their price gets too high so its possible that funds like SMT and Fundsmith could see drops in excess of 40% in future.
  • Steve182
    Steve182 Posts: 623 Forumite
    Fourth Anniversary 500 Posts Photogenic Name Dropper
    Alexland said:
    Steve182 said:
    For what it's worth Fundsmith Equity actually has a lower Trustnet risk score than VLS100.
    Last time I checked the Trustnet risk score only considers the previous 36 months of volatility so might not represent what might happen to growth funds in the event we see a sustained style rotation (as can happen in the middle of a super cycle). Even 'safe' assets get risky if their price gets too high so its possible that funds like SMT and Fundsmith could see drops in excess of 40% in future.
    That's very true. I was braced for a 40% (or thereabouts)  average drop on all stocks when we had the "covid correction" this time last year. 

    Fundsmith and SMT are very different animals in terms of volatility, and regardless of how you view the relevance of Trustnet ratings, the fact that SMT has a rating of 158 against Fundsmith at 71 is very significant. The FTSE100 is the benchmark 100 risk score. Offered a FTSE100 tracker with a risk of 100 VS Fundsmith @ 71?  I know where I would but my money. That's not intended to be a rant at your reply by the way, just something I wanted to express.
    “Like a bunch of cod fishermen after all the cod’s been overfished, they don’t catch a lot of cod, but they keep on fishing in the same waters. That’s what’s happened to all these value investors. Maybe they should move to where the fish are.”   Charlie Munger, vice chairman, Berkshire Hathaway
  • maxsteam
    maxsteam Posts: 718 Forumite
    500 Posts First Anniversary Name Dropper Photogenic
    Hi, new here and hoping you guys can steer me in the right direction.
    Basically I have a £5000 lump sum and around £400 per month to invest. Happy to tie this in for 10 years. Had a look around the various threads and pretty much not sure where to start with it. I am not looking to spend too much time on it and would prefer an "off the shelf" option.
    You should look for advice elsewhere.

    There's nothing wrong with reading these boards but you also need to read other material. Whichever banks you use, they are likely to have an "investing for beginners" section of their website which is worth reading. One problem with these boards is that any idiot like me can come here and tell you what to do with your hard earned money.
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