Vanguard funds and investment approach

Bobziz

Thrugelmir said:

Keep it simple initially. Keep reading contradictory viewpoints. In time you'll be better placed to reach your own balanced viewpoint. Many investors quickly discard anything which doesn't reinforce a currently held belief. Markets are akin to a constantly shifting sand dune. Wind can change direction before you know it. Though rarely does it change totally unexpectedly. 

Which do you find to be the most useful sources of information ? Lots of subscription based offerings and fund house promotional stuff but where do you go for agendaless views and reports ?

whatstheplan

bostonerimus said:
With a Lifestrategy you'll get some emerging markets and a lot of other stuff too. It's very easy to be paralyzed by the amount of choice available so don't get stuck in the weeds of Morgan Stanley articles. The goal isn't necessarily to look back and come up with tweaks to optimize a portfolio for return, it's to come up with a holistic financial plan to achieve your goals with a reasonable amount of risk. If you can get sufficient return from a lower risk investment do you really want or need to invest in riskier stuff. The difficulty comes when you need big returns and so are tempted by riskier choices with the potential for big losses.

Don't worry about what other people's investments are returning, this isn't a competition. Over the last 10 years I've average 9% annual return, that's more than some and less than others, but the only thing that matters to me is that it is more than I needed to meet my financial goals. Remember Morgan Stanley has a vested interest in seeming to be on top of stuff and having the answers and need to keep producing prognostications; the future is as unknown to them as it is to you.

Thanks.  Yes, I've already seen a few articles where prominent people involved in this field essentially say no one actually knows what the markets will bring, or there would be a lot more millionaires/billionaires.  They further assert you should ignore anyone that suggests they do know what is going to happen with any certainty, however even though I'm new to this I'm long enough in the tooth to know there's quite a lot of misinformation and/or heavily weighted information in a particular direction due to vested interests.

I suspect I will want to tweak more perhaps from 2022 as I'm finding the whole thing very interesting, however I've decided for now to stick to Vanguard's LifeStrategy, probably the 100 as I see little benefit in holding 20% bonds in my situation.

JohnWinder

Good discussion.

Bobziz said:

Which do you find to be the most useful sources of information ? Lots of subscription based offerings and fund house promotional stuff but where do you go for agendaless views and reports ?

And how do we deal with the Morgan Stanley type articles that report the view, or reality, that folk have been under-investing in emerging market stocks recently?

That sort of material is a hazardous distraction for readers who are ‘under educated’ on investing matters, and for readers who are educated enough those articles become either a complete waste of time which add nothing for you, or they are more granular detail about the state of the world for those with plenty of time and interest to delve into investing trivia. At some stage I’ll probably give up even skimming them.

Using the EM example, it might be useful to know that: it’s about 15% of global equity; probably has better returns because of higher risk; there can be years or decades when it under- or over-performs relative to the developed world equity markets; some broad index funds don’t or do include EM stocks. Beyond that there’s probably not much that’s relevant to know for the informed DIY investor who is capable of managing a simple and very good portfolio. And that’s why there is so much unhelpful material such as that in the Morgan Stanley report; because it would be endlessly repetitive to write the few useful bits of information every week in countless articles, so we get new irrelevant stuff. Tune out from it if you can might be the solution.

So, where to get the useful information. There are decent books like Tim Hale’s in your library or bookshop, or start with the free ones:

William Bernstein has three goodies:

https://www.etf.com/docs/IfYouCan.pdf

http://1.droppdf.com/files/0opyj/the-four-pillars-of-investing-by-william-j-bernstein.pdf 

The Investors’ Manifesto  http://www.efficientfrontier.com/files/TIM.pdf

There’s Jim Otar’s Unveiling the retirement myth, running to 500 pages: http://docshare04.docshare.tips/files/22966/229669551.pdf

Two illuminate Jack Bogle’s philosophy and approach:

 doc.xueqiu.com/14cf53ebdeb1cd3fd7a1bfa2.pdf. Bogleheads guide to investing by Larimore.

https://www.academia.edu/35165688/The_little_book_of_common_sense_investing

And there’s Ferri’s first book.

https://rickferri.com/books/serious-money-straight-talk-about-investing-for-retirement/

in the UK, Vanguard do not have the best trackers in every area.   They have a decent range but HSBC, L&G and iShares come out better in some areas. 

What criteria would you suggest we could use to choose the best/better trackers?

bostonerimus

JohnWinder said:

Good discussion.

Bobziz said:

Which do you find to be the most useful sources of information ? Lots of subscription based offerings and fund house promotional stuff but where do you go for agendaless views and reports ?

And how do we deal with the Morgan Stanley type articles that report the view, or reality, that folk have been under-investing in emerging market stocks recently?

That sort of material is a hazardous distraction for readers who are ‘under educated’ on investing matters, and for readers who are educated enough those articles become either a complete waste of time which add nothing for you, or they are more granular detail about the state of the world for those with plenty of time and interest to delve into investing trivia. At some stage I’ll probably give up even skimming them.

Agreed. The a lot of the so called information put out by financial companies is less than worthless to the average investor, in fact it can be misleading and dangerous. Investing does not need to be complicated, but there are many vested interests that need to make it seem complicated so they can charge their fees and justify their existence. K.I.S.S is my motto and I always keep Mr. Micawber's little aphorism in mind.

"Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

Micawber knew this to be true from grim experience.

Eco_Miser

whatstheplan said:

My primary objective is to retire from my 9-5 asap, aiming for anywhere between 58-62 (currently 49.)  Ideally somewhere between 58-60, failing that 61-62.  I have a work place pension, paid in 14 years to date.  I plan to start making additional payments into that.  Also 3 x BTLs (all mortgaged) the intention is to sell 2 of those when I'm in the 58-60 bracket and retain 1 mortgage free as a boost to my retirement pot.

So you reckon you'll be OK from age 67, with your works pension kicking in at 63?

That means you want this investment plus your equity in two of the BTLs to bridge from as-soon-as-possible to 67.

As a first estimate work out your ASAP date by dividing the value of that equity and investment (and four years works pension) by your intended annual spend, giving the number of years it would support now, and subtract from 67. That's the latest you could retire early (unless your investments go down).

Then work out how much you would be adding to the pot (as mortgage payments and ISA contributions)  up to that time, and redo the calculation to get the earliest you could retire early (again assuming investments don't go down).  You could add in an assumed growth from your investments to get a possible earlier date, but you should also make assumptions about equities dropping 50% to balance them.

You might also see the effect of lower spending on how much earlier you could drop the 9-5.

Keep redoing these calculations as the years go by and you have more accurate data, and one day your possible retirement date will coincide with the calendar.

Invest lump sums as soon as you have decided what to invest in, markets generally go up, there's no point in leaving cash sitting in your S&S ISA doing nothing, and in any case, if a fall is coming, it could come just after you've invested your last drip of a drip feed.

You've got a lot in property, you probably don't need bonds.

Thrugelmir

Bobziz said:

Thrugelmir said:

Keep it simple initially. Keep reading contradictory viewpoints. In time you'll be better placed to reach your own balanced viewpoint. Many investors quickly discard anything which doesn't reinforce a currently held belief. Markets are akin to a constantly shifting sand dune. Wind can change direction before you know it. Though rarely does it change totally unexpectedly. 

Which do you find to be the most useful sources of information ? Lots of subscription based offerings and fund house promotional stuff but where do you go for agendaless views and reports ?

A few suggestions

Eddison Research.   https://www.edisongroup.com/

Citywire     https://citywire.co.uk/

ShareSoc  https://www.sharesoc.org/     (Plenty of free stuff). 

CityAm https://www.cityam.com/podcast/city-view/

When they reopen you local main library is a useful resource. Normally have quality publications such as FT, Investors Chronicle, Economist , Moneyweek etc available to read. Better sitting than standing in WH Smith. 

Don't discard Fund Managers either. They are extremely knowledgeable people. Amongst the self promotion. You'll glean a lot of broader information and perspective.  

Company accounts and fund reports, also monthly factsheets. Chairman's statements in accounts are worth reading even if you struggle with the accounting information. 

Bobziz

Thrugelmir said:

Bobziz said:

Thrugelmir said:

Keep it simple initially. Keep reading contradictory viewpoints. In time you'll be better placed to reach your own balanced viewpoint. Many investors quickly discard anything which doesn't reinforce a currently held belief. Markets are akin to a constantly shifting sand dune. Wind can change direction before you know it. Though rarely does it change totally unexpectedly. 

Which do you find to be the most useful sources of information ? Lots of subscription based offerings and fund house promotional stuff but where do you go for agendaless views and reports ?

A few suggestions

Eddison Research.   https://www.edisongroup.com/

Citywire     https://citywire.co.uk/

ShareSoc  https://www.sharesoc.org/     (Plenty of free stuff). 

CityAm https://www.cityam.com/podcast/city-view/

When they reopen you local main library is a useful resource. Normally have quality publications such as FT, Investors Chronicle, Economist , Moneyweek etc available to read. Better sitting than standing in WH Smith. 

Don't discard Fund Managers either. They are extremely knowledgeable people. Amongst the self promotion. You'll glean a lot of broader information and perspective.  

Company accounts and fund reports, also monthly factsheets. Chairman's statements in accounts are worth reading even if you struggle with the accounting information. 

Thanks , that's very helpful. Easy to follow the herd without thinking or questioning. I do wonder how many DIY investors would be able to provide a strong answer to why they've invested in what they have. Why overweight EM or Asia Pacific, small caps or UK, value or growth. Some will have some good reasons, others may struggle to justify. 

Thrugelmir

Bobziz said:

Thrugelmir said:

Bobziz said:

Thrugelmir said:

Keep it simple initially. Keep reading contradictory viewpoints. In time you'll be better placed to reach your own balanced viewpoint. Many investors quickly discard anything which doesn't reinforce a currently held belief. Markets are akin to a constantly shifting sand dune. Wind can change direction before you know it. Though rarely does it change totally unexpectedly. 

Which do you find to be the most useful sources of information ? Lots of subscription based offerings and fund house promotional stuff but where do you go for agendaless views and reports ?

A few suggestions

Eddison Research.   https://www.edisongroup.com/

Citywire     https://citywire.co.uk/

ShareSoc  https://www.sharesoc.org/     (Plenty of free stuff). 

CityAm https://www.cityam.com/podcast/city-view/

When they reopen you local main library is a useful resource. Normally have quality publications such as FT, Investors Chronicle, Economist , Moneyweek etc available to read. Better sitting than standing in WH Smith. 

Don't discard Fund Managers either. They are extremely knowledgeable people. Amongst the self promotion. You'll glean a lot of broader information and perspective.  

Company accounts and fund reports, also monthly factsheets. Chairman's statements in accounts are worth reading even if you struggle with the accounting information. 

Thanks , that's very helpful. Easy to follow the herd without thinking or questioning. I do wonder how many DIY investors would be able to provide a strong answer to why they've invested in what they have. Why overweight EM or Asia Pacific, small caps or UK, value or growth. Some will have some good reasons, others may struggle to justify. 

@Bobziz  Omitted to include the Credit Suisse Investment Returns Yearbook.  Published every year in March. An abbreviated free version can be found and downloaded in PDF form. For a concise overview definitely worth a read.