£1k that I’m happy to lock away for a year or more

bostonerimus

Alex.T said:

bostonerimus said:

Do some research on your company pension so you understand how you are invested. I would be putting a lot more into that pension as a priority as you get a big tax advantage.

Thank you. Looks like the L&G pension that my company have set up for us is invested in the Blackrock Aquila 50/50 Global Equity Index. I can't find any information regarding how much I can put in to it in reference to a pension. Am I able to put up to 5% myself and 5% from the company then? Excuse my ignorance. I'm just trying to sort out a login for my personal account with L&G.

Going back to the original post, I'm going to aim for a minimum of £1000 deposit into a S&S ISA then a minimum of £100 direct debit for a period of 5 years, with the intention of either re-investing after 5 years of investment (the year I turn 40), or withdrawing and doing something else with the lump sum. If I remove the lump sum, I will start another savings plan which will be over a period of 20 years for my personal pension at age 60, which will coincide with our mortgage being paid off.

Basically the total of yours and your employer's pension contributions should not exceed £40k annually. If you can you should be looking to put 10% of your salary into your pension and then with 5% from your employer and the tax bump from the government you will be doing well.
Is all your pension money in that one Blackrock fund?  It has a strong UK bias and is all equities you probably should have some bonds/fixed income in your portfolio. Does the pension start to add some bonds/fixed income to your portfolio as you get older or do you have to choose the investments?

Alex.T

By the looks of it, there is that one and also the 'BR Aquila over 15years UK Gilt Index' and the 'BR Institutional Sterling Liquidity' but neither of these have any amounts in them currently. All is in the Aquila 50/50 Global. 
I'm hoping that once I am able to log into the L&G account I will be able to get more information about it.
Thanks again, really helpful!

bostonerimus

Alex.T said:

By the looks of it, there is that one and also the 'BR Aquila over 15years UK Gilt Index' and the 'BR Institutional Sterling Liquidity' but neither of these have any amounts in them currently. All is in the Aquila 50/50 Global. 
I'm hoping that once I am able to log into the L&G account I will be able to get more information about it.
Thanks again, really helpful!

You might have chosen some default option when things were set up. Getting involved and understanding you pension should be your immediate priority

Alex.T

I'm looking into opening an account with Vanguard and investing the first £1000 into one of their VLS range, but I'm confused a little between the different amount of equity. Am I right in thinking the Equity (for example 80%) is the Stocks and Shares element, and what will fluctuate in value. And the Bond (20%) is the amount of my investment that will be 'loaned' and will not fluctuate in value - apart from interest earned.
I'm looking at either the 80% Equity or 100% Equity VLS, due to the amounts they invest in emerging market stock index fund, which I'm keen to have in my portfolio. So its just the Bonds that are confusing for me currently.

kuratowski

Partially.  Yes, the 80 in VLS80 is the equity proportion.  But no, Bonds are not immune to market fluctuations as you suggest.  Bonds are still investments - they represent borrowing by governments and companies, and they are traded openly on the market.  Bonds can rise and fall in value quite considerably depending on prevailing interest rates and market perception of credit risk.  They are typically less volatile than the equity component, however.  And they have a correlation with equities of less than 100% so including them in the porftolio reduces the overall risk.

bostonerimus

Equities are shares in publicly traded companies, think IBM, Rolls Royce etc. Bonds are loans that people make to companies, governments etc. They pay a certain amount of interest and you get your money back after the term of the bond is over. They can also be traded and so go up and down in price, but very generally they tend to be less volatile than equities...the shorter the term of the bond the less volatile.
You should not be buying VLS to get into emerging markets if you like that sector. You should buy VLS because it is an inexpensive broad multi-asset series of funds and you can choose the ratio between stocks and bonds to meet your risk tolerance.

Thrugelmir

Alex.T said:

 And the Bond (20%) is the amount of my investment that will be 'loaned' and will not fluctuate in value - apart from interest earned.

The interest rate is normally fixed and set at the time the bond is launched. 

Alex.T

kuratowski said:

Partially.  Yes, the 80 in VLS80 is the equity proportion.  But no, Bonds are not immune to market fluctuations as you suggest.  Bonds are still investments - they represent borrowing by governments and companies, and they are traded openly on the market.  Bonds can rise and fall in value quite considerably depending on prevailing interest rates and market perception of credit risk.  They are typically less volatile than the equity component, however.  And they have a correlation with equities of less than 100% so including them in the porftolio reduces the overall risk.

Thank you, nicely explained. 

bostonerimus said:

Equities are shares in publicly traded companies, think IBM, Rolls Royce etc. Bonds are loans that people make to companies, governments etc. They pay a certain amount of interest and you get your money back after the term of the bond is over. They can also be traded and so go up and down in price, but very generally they tend to be less volatile than equities...the shorter the term of the bond the less volatile.
You should not be buying VLS to get into emerging markets if you like that sector. You should buy VLS because it is an inexpensive broad multi-asset series of funds and you can choose the ratio between stocks and bonds to meet your risk tolerance.

Super, this interests me alot actually, as I feel being new to investing, I'd prefer to have the risk level a little more black and white - to test my tolerance level perhaps!
Emerging markets is certainly an area of interest for me too, so I will research investing directly into some of these too, as opposed to the VLS.

bostonerimus

Alex.T said:

kuratowski said:

Partially.  Yes, the 80 in VLS80 is the equity proportion.  But no, Bonds are not immune to market fluctuations as you suggest.  Bonds are still investments - they represent borrowing by governments and companies, and they are traded openly on the market.  Bonds can rise and fall in value quite considerably depending on prevailing interest rates and market perception of credit risk.  They are typically less volatile than the equity component, however.  And they have a correlation with equities of less than 100% so including them in the porftolio reduces the overall risk.

Thank you, nicely explained. 

bostonerimus said:

Equities are shares in publicly traded companies, think IBM, Rolls Royce etc. Bonds are loans that people make to companies, governments etc. They pay a certain amount of interest and you get your money back after the term of the bond is over. They can also be traded and so go up and down in price, but very generally they tend to be less volatile than equities...the shorter the term of the bond the less volatile.
You should not be buying VLS to get into emerging markets if you like that sector. You should buy VLS because it is an inexpensive broad multi-asset series of funds and you can choose the ratio between stocks and bonds to meet your risk tolerance.

Super, this interests me alot actually, as I feel being new to investing, I'd prefer to have the risk level a little more black and white - to test my tolerance level perhaps!
Emerging markets is certainly an area of interest for me too, so I will research investing directly into some of these too, as opposed to the VLS.

That's not what I would do. As a novice investor it's easy to make costly mistakes. So you should keep things simple. Stick with something like the VLS funds. Emerging markets are risky and they should only form a small part of the average investor's portfolio and that's exactly what you'll get with VLS.

Alex.T

Thanks. Looks like the VLS 80% equity is the one for me I think. Thank you for your input, it’s much appreciated.