AJ Bell Lisa Which Fund to Invest in?

katkatmachine

Hi All,

I have finally moved my Cash LISA from Skipton to AJ Bell. The problem is there's just so many funds to invest in that I don't know where to start. Can you please recommend some? I'm just so confused! Here's some info about myself:

31 years old
Investment is for my retirement (60 years old)
Adventurous and leaning towards equity and growth stocks/funds
Current balance in LISA: £3200
I plan to invest only £100 per month or £1200 per year. Due to the fees, I'm thinking of just buying shares 2-3 times a year.

Can you please advise/recommend a few funds where I can invest my money in given my info above?

Thanks,
Kat

Alistair31

I’m the same age and have my LiSA with Youinvest too, fwiw, I am mostly in VWRP - but you should do your own research obviously.

kuratowski

A multi-asset fund is what is usually recommended for those new to investing.  The idea is that the fund is a "one stop shop", a self contained globally diversified portfolio with automatic rebalancing: it does all the work for you.  There are several equivalent series available on the market, and each one comes in five different risk ratings on a scale of 1-5.  For "adventurous and leaning towards equity and growth" you are likely to want risk level 4 or 5.

The following link gives a quick comparison of the options; most of these are available on AJ Bell.

https://monevator.com/passive-fund-of-funds-the-rivals/

Alexland

At that account valuation I would hold the HSBC FSTE All World Acc fund at 0.13% or maybe (if you think the US is now looking expensive) Vanguard LifeStrategy 100 which has some UK bias at 0.22% but then for a smoother ride with slightly less bad crashes maybe a multi asset fund such as Vanguard LifeStrategy 80, HSBC Global Strategy Dynamic, etc. Once the account gets to around £20-25k consider switching to an ETF or Investment Trust for capped platform fees.

Polly05

Or the vanguard lifestrategy ones that are aimed for a retirement year.. 

Billycock

Polly05 said:

Or the vanguard lifestrategy ones that are aimed for a retirement year.. 

Vanguard Target Retirement funds are specifically for that purpose, just select the date closest to your retirement year, doesn't matter if it's a few years above your retirement year because it's your choice when to take it. That said, there's no reason not to select LifeStrategy funds or any other funds for that matter.

katkatmachine

Hi All,

Thank you very much for the advice. I’ve looked at the funds you guys suggested and I’ve decided to invest in Vanguard LifeStrategy 100 Acc and also a small amount in an EM fund from BNY Mellon. EM for me is very promising, high risk high reward so I put a small amount. Just want to see how it will progress in the coming years. Thanks again for all your inputs.

Kind regards,
Kat

JohnWinder

How hard if it’s not interesting to you, but there can be value in gaining some understanding of the main nuts and bolts of investing so that you’re not reliant on being led somewhere but can both find your way yourself and be better prepared to deal with unexpected curve balls, or rising balls outside the off stump if you prefer. Give a woman a fish and you feed her for a day, but teach her how…...

Here’s a link to give you something to chew on; others will come up with a local source which is better for you, no doubt: https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

Your best choices are likely fund(s) of stocks and bonds. The stocks should be well diversified, covering the whole world or near enough. Because governments are a lot more reliable than public companies in repaying their debts, you probably don’t need to go beyond your own government for bonds, but you could, as both would be about as low risk as you can get with time on your side. You now simply need to decide how the stocks and bonds are proportioned for you….simply! Have a look at some long history of stock and bond price movements to see how much they can fall in a crisis, to be sure you won’t capitulate at a bad time and realise losses you don’t need to.

For a long term investor like you, try to keep recurring, asset based costs low, because they compound to your detriment over long periods just as growth compounds to your benefit over long periods. Actively managed funds, for this reason, are usually poorer choices.

Alexland said:

... or maybe (if you think the US is now looking expensive) ...

Resist such thoughts until you’re experienced enough to have 6000 posts. Even the experts struggle to make guesses like that correctly.

katkatmachine said:

 EM fund from BNY Mellon. EM for me is very promising, high risk high reward so I put a small amount. Just want to see how it will progress in the coming years.

Once again, be careful trying to predict things like something being very promising - whatever that means. That’s something for experts, and even they fail too often. Let us know if you need the evidence for that.

Seeing how something progresses over several years is not a good basis for choice in my view; if it progresses poorly, as some notable investing strategies have in a recent decade, it might be about to turn the corner and shoot the lights out, and visa versa. Every fund summary sheet warns about past performance not indicating future performance; ignore that at your peril. Find more reliable bases for fund choices if you can.

Alexland

JohnWinder said:

Alexland said:

... or maybe (if you think the US is now looking expensive) ...

Resist such thoughts until you’re experienced enough to have 6000 posts. Even the experts struggle to make guesses like that correctly.

Kat has make a good choice with VLS100. It already includes EM exposure so I wouldn't have added the extra fund especially as AJ Bell charge £1.50 per trade so are better suited to holding one investment but it's a free world and VLS100 is still nearly 50% US weighted which is still more than I would want at the moment so diluting it with something else might be a good move.

It doesn't seem right to suggest a pure cap weighted global tracker which might now have around 60% US exposure without mentionting that there has been a significant divergence in valuations with US stocks now trading at high prices relative to fundamentals and the rest of the world.

At the start of the year long term capital market models run by Vanguard, Credit Suisse, etc were flagging that such high valautions were likely to cause the US to underperform in the decade ahead and following further price rises this year the latest model from Research Affiliates is even suggesting that US shares will have a below inflation return. It's getting to the point where there's little point taking the investment risk if cash products might provide a similar likely return. Still maybe this time it will be different..

JohnWinder

Alexland said:

It doesn't seem right to suggest a pure cap weighted global tracker which might now have around 60% US exposure without mentionting that there has been a significant divergence in valuations with US stocks now trading at high prices relative to fundamentals and the rest of the world.

I carefully didn’t suggest a pure cap weighted global tracker, my words were:

JohnWinder said:

 The stocks should be well diversified, covering the whole world or near enough.

I did that because I wanted to allow for some home bias which I think has merit, but new information needs to come in chewable steps so I omitted that.

Nonetheless, you’re right, we shouldn't make poor suggestions to others. I’d be happy with only a cap weighted global tracker, and justify suggesting it by saying that any concern that US stocks are over-priced which is held by you, me and plenty of others, must be being balanced by a view that they are not over-priced; otherwise the price would fall immediately. The prices can only reflect what the market participants as a whole think; and if I were to imagine that I was smarter in my reckoning than the market as a whole…….well, I just don’t. 

Of course, doing some trading to take account of my view that US stocks are over-priced might turn out better than doing nothing about it, but a phalanx of professional fund managers ‘take bets’ on that sort of feeling/analysis, call it what you wish, all the time yet we know that over periods exceeding about 3 years the majority get it wrong (as demonstrated by having returns less than those of the folk who just ignored all that speculation).

And ‘phalanx' might have some validity here, because I wonder if the pundits tend to mostly follow the same line of thinking, and use the same sources of information to come to the same possibly wrong conclusions. Don’t forget the 100% of economists (67 in total) who couldn't predict even the direction of interest rate changes a few years ago, let alone their magnitude.

https://www.marketwatch.com/story/yes-100-of-economists-were-dead-wrong-about-yields-2014-10-21

How were Research Affiliates predictions made 5 years ago, or 2 years ago, that we might see how good they were? Part of their business, to make their money, is to come up with analyses like that. It never has to be right, just done. It can be fun to read, but I doubt it gets most of us anywhere better. Depends how much of a gambler one is I suppose, and no crime in being one.

Alexland

JohnWinder said:

And ‘phalanx' might have some validity here, because I wonder if the pundits tend to mostly follow the same line of thinking, and use the same sources of information to come to the same possibly wrong conclusions.

I agree that most of these capital market models are probably using the same inputs and applying the same generally accepted data transformations to simulate long term reversion to the mean valuations to generate drags or uplifts on expected future return. They will then have a similar way of modelling the likely organic growth and the reinvested dividends is just simple maths although could be affected by any price volatility during the period.

Perhaps some of the more advanced ones are factoring that US shares do tend to be a bit higher valued but with a gap that has tended to be smaller than we are now seeing. The models won't know if in 10 years time the US shares will still be very expensive compared to the rest of the world or if even US shares might be looking cheap after a decade of very poor returns during which traders emotionally give up on them similar to what seems to have happened in to UK listed companies despite many of the worst Brexit uncertainties now passing. Markets, sectors and investment styles seem to build a reputation for recent strong or poor performance that runs ahead of reality that are neither rational or predictable over short periods of time.