burnt out nurse and investing newbie

Alexland

bluefukurou said:

I would avoid Life Strategy because it's overly concentrated in the UK, which is a small part of the world market, a bit like putting too many eggs in one basket. 

But then without the UK bias there would probably be an even higher weighting of the US market so even more eggs in that basket which has done so well recently.

Sun-Is-Fun

If you want to retire at 55, I would seriously look at buying into additional NHS pension and/or paying into a SIPP (for basic rate tax payers, every £100 you put in gets you £125 back due to tax relief up to your yearly earnings). You say you lead a simple life and are mortgage free. You could possibly live on the tax free amount (currently £12570) without paying any tax at all if you did the above and diverted some of your money into pensions.

bluefukurou

Alexland said:

bluefukurou said:

I would avoid Life Strategy because it's overly concentrated in the UK, which is a small part of the world market, a bit like putting too many eggs in one basket. 

But then without the UK bias there would probably be an even higher weighting of the US market so even more eggs in that basket which has done so well recently.

As I understand it, you buy a global tracker and this is basically just an investment on the global stock markets, as far as that is possible. You are saying that you don't think emerging markets or Japan, etc, will outperform in the coming years because nobody knows; some may argue that you don't have enough small caps or enough of x, y and z, but the goal is just to capture the world market as simply and cheaply as possible. The US would be the biggest portion, but only because the US has the largest portion of the world's stock market.

By buying something like Vanguard's FTSE Global All Cap Index Fund as the equity part of your portfolio, you are incredibly diversified and there's no need to pay multiple trading fees, which you would have to every time you buy and sell a separate fund. The people you see with sometimes dozens of funds in their portfolio are overcomplicating things. Any 'edge' you may think you have is likely to be wiped out by the fees alone, not to mention the hassle of organising it all.

Sun-Is-Fun said:

If you want to retire at 55, I would seriously look at buying into additional NHS pension and/or paying into a SIPP (for basic rate tax payers, every £100 you put in gets you £125 back due to tax relief up to your yearly earnings). You say you lead a simple life and are mortgage free. You could possibly live on the tax free amount (currently £12570) without paying any tax at all if you did the above and diverted some of your money into pensions.

Seconded. Folks should take advantage of anything they can to boost returns. SIPPs are great because of the 20%, in a sense, free money you get.

Alexland

bluefukurou said:
By buying something like Vanguard's FTSE Global All Cap Index Fund as the equity part of your portfolio, you are incredibly diversified 

You get an incredible number of underlying holdings but the cap weighting causes a heavy tilt to US growth stocks.
There is a good argument that better diversification can be achieved by not letting some companies become so dominant in your portfolio and home bias as seen in VLS can go some way to addressing the style and geographic imbalance currently found in global trackers.

stellios84

Vanguard have just launched a financial planning service (I can't post a link sorry I'm too new apparently).
Does anyone feel this could be a viable option for me? 

Alexland

stellios84 said:

Vanguard have just launched a financial planning service (I can't post a link sorry I'm too new apparently).
Does anyone feel this could be a viable option for me? 

It's just restricted advice to help you chose between their different funds and wrappers. If you are going to pay for advice you might as well get fully independent whole market advice.

https://www.ftadviser.com/your-industry/2021/04/19/vanguard-launches-advice-service-with-0-79-all-in-fee/

Still it's interesting that the average fund management costs on their advised service is 0.14% which suggests they are not just sticking their customers into VLS funds more likely using the building block geographic trackers.

https://www.vanguardinvestor.co.uk/financial-advice

Oh, they even tell you the funds they use (but not the proportions) in in the disclosure document:

(a) Vanguard FTSE U.K. All-Share index Unit Trust Fund

(b) Vanguard FTSE Developed Europe ex-UK Index Fund

(c) Vanguard Emerging Markets Stock Index Fund

(d) Vanguard U.K. Short-Term Investment Grade Bond Index Fund

(e) Vanguard U.K. Government Bond Index Fund

(f) Vanguard Global Corporate Bond Index Fund

(g) Vanguard U.K. Inflation-Linked Gilt Index Fund

(h) Vanguard U.S. Equity Index Fund

(i) Vanguard Japan Stock Index Fund

(j) Vanguard U.S. Government Bond Index Fund

(k) Vanguard Pacific ex-Japan Stock Index Fund

(l) Vanguard European Government Bond Index Fund; and

(m) Vanguard Japan Government Bond Index Fund

https://my.vanguardinvestor.co.uk/onboarding/assets/documents/VPFP Initial Disclosure Document.pdf

You get a tailored glide-path which may be more suitable than their VTR funds.

GeordieGeorge

I’m not able to give advice, because of my job, but I can say what I do, and why.

Just about all of my money which is not in my home is in the Vanguard Lifestrategy 100 fund. The rest is in cash on deposit,to be used in case of an emergency. That’s about a year’s salary.

I chose the fund I did it’s broad-based, has very low fees, and seems to be at about the level of risk that suits me, someone with some decades to go to retirement.

I won’t pay anyone for managing my money as I don’t believe that they can beat the market.

On the other hand, I do pay someone to recommend the best way to be tax efficient. Money that I won’t need until my retirement, for example, may be best placed in a personal pension, as I get to reclaim the income tax that I paid on any money that goes in.

Speaking to someone about this sort of thing (whether it makes sense to tie your money up in a pension for a tax benefit, what your investment horizon and aims are, and how much risk you are comfortable taking on) is probably a good idea.

GeordieGeorge

Eccles04 said:

Stay away from financial advisers. With few exceptions they are in the "GCSE O-level" standard of financial advice more interested in taking some of your money rather than growing it. I agree with others that bank funds are not generally in the upper tier of investment returns. Now have a look at this:- dividenddata.co.uk/investment-trust-dividend-yields.py and pick out two or three which show high returns, i.e., above 4%. But don't dive straight in, you need to do some research to see if those you have picked consistently produce high returns. If you don't know how to do this use type "investment trust historic returns" or something similar.

Why would you base decisions on previous returns? Your advice is terrible.

bluefukurou

Alexland said:

bluefukurou said:
By buying something like Vanguard's FTSE Global All Cap Index Fund as the equity part of your portfolio, you are incredibly diversified 

You get an incredible number of underlying holdings but the cap weighting causes a heavy tilt to US growth stocks.
There is a good argument that better diversification can be achieved by not letting some companies become so dominant in your portfolio and home bias as seen in VLS can go some way to addressing the style and geographic imbalance currently found in global trackers.

I take your point, but we'll have to agree to disagree. It seems you are arguing for active management and I am arguing for passive management. The fact that some US companies, particularly the FAANGs, are so big is not an issue. The key point is that you buy the market as it is. Once you start saying the market is too heavy weighted on these few stocks, you are saying you know better than the market. Things could change and those companies may reduce in market cap, being replaced by other companies. Or the FAANGs could get even bigger and you'd miss out on the gains if you had switched to a more UK focused weighting in your portfolio, such as by buying VLS. Unless you have a crystal ball and know in advance what the market weightings will be in the future, it's better to just take what the market gives you.

Eco_Miser

bluefukurou said:

The key point is that you buy the market as it is. Once you start saying the market is too heavy weighted on these few stocks, you are saying you know better than the market.

The trouble is the market is not homogenous; it's US university foundations trying to achieve perpetual income, high speed traders trying to make a few basis points on huge bets on temporary market dislocations, reditors trying to save a doomed store chain, hedge funds trying to make a profit from that chain's doom, pump & dumpers running a scam, venture capitalists trying to get their capital back at and after IPO, millions of ordinary people saving for their retirement and looking for growth in pensions and ISAs and Roth IRAs, and others, already retired looking for an income from those tax-advantaged accounts, CEOs & CFOs trying to keep their companies' share at the 'right' price, newbie day traders trying to understand what they're doing, and loads of others.

Now I don't know the future any better than anyone else (despite owning  a crystal ball), but I do know my objective, and that objective may be better served by not holding the whole of the global market in proportion to market cap.