Investing for the long term

max_bosher

I am looking at investing a lump sum of money to keep in a account for around 5 years, especially in a stocks and shares isa. Currently looking at investing in a Halifax one and debating between a S&P 500 ETF or a Vanguard fund for the whole US index
Also open to any other ideas?

AlanP_2

The US has led gains over the last few years, are you convinced it will continue to do so?

An alternative would be a global fund or a mixed asset option such as the Vanguard VLS range or HSBC Global Strategy range.

dunstonh

Currently looking at investing in a Halifax one and debating between a S&P 500 ETF or a Vanguard fund for the whole US index

Why just the US?

In the last decade they were the best performer but in the previous cycle they were amongst the worst.    The area/region that is best in one cycle is rarely the best in the next one.   And often it is one fo the ones near the bottom in the last cycle that is near the top in the next.

You are betting on them being the best two cycles in a row and that is rare.

max_bosher

Okay thanks for the advice I have been looking at global funds, thoughts on Baille Gifford long term global growth fund?

clsmooth48

You should consider a low cost passive global equity accumulation fund such as is offered by Vanguard. You’d do even better if you can make monthly contributions over the 5 years..

eskbanker

In the context of investing, five years isn't long term, it's effectively seen as the bare minimum....

max_bosher

clsmooth48 said:

You should consider a low cost passive global equity accumulation fund such as is offered by Vanguard. You’d do even better if you can make monthly contributions over the 5 years..

Will do, I won't be able to make monthly contributions as I am a student unfortunately 

Albermarle

clsmooth48 said:

You should consider a low cost passive global equity accumulation fund such as is offered by Vanguard. You’d do even better if you can make monthly contributions over the 5 years..

Statistically it is better to make a lump sum investment , than spread it out . Although there is the risk of a sharp drop after you make the investment, if you are unlucky.
Also as the OP said they wanted to invest for only 5 years , then if you spread the investment over 5 years then a lot of it will only be invested for less than 5 years, which is too short .

grumiofoundation

What are you investing for? 

If you are saving (investing) to buy a property have you considered a lifetime ISA? 

https://www.moneysavingexpert.com/savings/lifetime-isas/

Due to penalty not suitable for money you might need access to (but then ideally neither is a stocks and shares ISA). 

Can open a stocks and shares or Cash lifetime ISA, as said above over a 5 year timescale cash may be more sensible? 

clsmooth48

Albermarle said:

clsmooth48 said:

You should consider a low cost passive global equity accumulation fund such as is offered by Vanguard. You’d do even better if you can make monthly contributions over the 5 years..

Statistically it is better to make a lump sum investment , than spread it out . Although there is the risk of a sharp drop after you make the investment, if you are unlucky.
Also as the OP said they wanted to invest for only 5 years , then if you spread the investment over 5 years then a lot of it will only be invested for less than 5 years, which is too short .

Agreed I meant that it would be really beneficial to continue to make regular small contributions monthly after the initial lump sum deposit. Even if it’s just £20 a month (£5 a week), that’d be £240 a year and £1,200 over the 5 years. I’m aware it’s difficult as a student to find spare cash, but if you could manage that, I think you’d be very happy after the 5 years. Saving/investing should be slightly uncomfortable for the best long term results

dunstonh

 I meant that it would be really beneficial to continue to make regular small contributions monthly after the initial lump sum deposit. Even if it’s just £20 a month (£5 a week), that’d be £240 a year and £1,200 over the 5 years

That would not be a good thing to do as only one payment would be invested for 5 years.  The next 4 years 11 months etc.  It would stand a very high chance of being in a loss position with just a 5 year term overall.

Saving/investing should be slightly uncomfortable for the best long term results

Unfortunately, the OP is not looking at long term. THey are looking at short term.