2nd S&S ISA, Fidelity and SMT

Voyager2002

I have to respond to your question (2). Fidelity and LS100 are totally different, with SMT representing a considerable increase in risk. You would not be reducing your risk by spreading your investment between the two since LS100 is made up of a large number of shares in companies around the world while SMT is concentrated in a limited number of companies. (It is probable, although I have not checked, that most of the companies held by SMT are also held by LS100, but of course LS100 is spread far more thinly across far more companies.)

If your goal is to reduce risk (while still investing 100 per cent in shares) then you could look at the HSBC GIF series, which are similar to Vanguard but less exposed to the UK. SMT is a good home for any money that you can afford to lose but are willing to risk in the hope that it doubles (or more).

Thrugelmir

What's your tolerance to making a capital loss on one of your equity fund holdings?  Risk isn't singular. Risk comes in many forms. 

whatstheplan

Thrugelmir said:

What's your tolerance to making a capital loss on one of your equity fund holdings?  Risk isn't singular. Risk comes in many forms. 

Thanks again all.

When I referred to reducing risk by not being 'all in' with one fund, I didn't mean that I thought SMT is a less risky proposition if that makes sense.  I was meaning from a perspective of not having all my proverbial eggs in one basket, so should one investment start to underperform it doesn't equate to 100% of my total investment pot reducing in value ... unless the other investment also starts to underperform that is!

I understand that products like LS100 and to a lesser extent SMT reduce risk for investors by spreading investments across x companies, so I suppose I'm using, perhaps tenuously, the same process when it comes to my £40k investment i.e. not putting 100% into one thing (diversification?), thereby mitigating the risk of my whole investment pot reducing in value.  Perhaps my rationale doesn't make sense, if it doesn't, just tell me, here to learn and all that

My goal is to grow the £40k (and whatever else I invest over the next few years) as much as I possibly can over the next decade.  As per my other topics (retire earlier etc) I hope to start exploiting any investment gains 9-10 years from now.  However, I'm aware there could be ups and downs over the decade, I'm also aware my £40k could theoretically be worth less a decade from now, even a lot less.  I'm comfortable accepting that risk.

As I've touched on in other topics, my backup plan is to keep working for another few years e.g. to 65.  I have my workplace pension.  It's not what I want to do, but I will if need be i.e. if my retire earlier plan doesn't come to fruition.