Simple way to the S&P 500

Thrugelmir

6022tivo said:

grumiofoundation said:

6022tivo said:

eskbanker said:

It all sounds a remarkably haphazard way of investing, both in terms of choosing a specific index and then selecting a platform  without any apparent idea of what he's doing there either, but there will be S&P 500 trackers available there.  Is he planning to research investing properly?

Depends what you call researching investing properly. 
Forums like this are useful when a useful person comes along, I think there are some here. I'll hang on for one. 

It's not a difficult task tho. 

Some companies offer these S&P type funds or trackers or whatever they are, and it's just a friendly post to find out what is the best way to get involved in one. 

Is it not a useful person who questions an investing strategy which appears to involve a) ignoring all but 500 companies in the US and b) opening an account on a platform before checking if that platform has the investments they would want.

Although a) could be a thought through investment decision when put in combination with b) seems less likely.

I believe the application to open an account was following internet advice, but again, hence the posting on here. 

There's only discussion on the internet. Advice is a regulated activity.  Rather than believing, worth asking and understanding what lies behind the decision. Otherwise it's just speculation. 

GeoffTF

GazzaBloom said:

GeoffTF said:

He could buy this:

https://www.vanguardinvestor.co.uk/investments/vanguard-s-and-p-500-ucits-etf-usd-distributing/overview?intcmpgn=equityusa_sp500ucitsetf_fund_link

Nonetheless, it is not a very sensible sole investment for a UK based investor, and Charles Stanley is certainly not a competitively priced platform.

Hi GeoffTF, what reasons would you suggest make investing solely in the S&P500 not very sensible for a UK based investor? Do you mean it's not very sensible for any investor, regardless of location including one based in the US? Or specifically detrimental for UK investors?

An S&P 500 tracker is a reasonable sole equity investment for a US based investor. It offers a reasonable level of diversification, and they would not pay any withholding tax. The UK market has a very poor level of diversification. It makes sense for us to invest globally. Investing in just the US would restrict our diversification for no benefit. A global tracker makes sense for a UK investor. There is a case for us to over-weight the UK market a little, but that is not necessary and perhaps not even desirable.

Nonetheless, it is necessary to step back. Does a 100% equity investment make sense at all for your friend? It may or it may not depending on his financial circumstances. Even if it does, there is an old saying "never invest in anything that you do not understand".

jimjames

6022tivo said:

eskbanker said:

It all sounds a remarkably haphazard way of investing, both in terms of choosing a specific index and then selecting a platform  without any apparent idea of what he's doing there either, but there will be S&P 500 trackers available there.  Is he planning to research investing properly?

Depends what you call researching investing properly. 
Forums like this are useful when a useful person comes along, I think there are some here. I'll hang on for one. 

It's not a difficult task tho. 

It's true it's not a difficult task, it helps if the person asking is helpful with the details they provide too. If they can find an account to buy an investment then presumably they can also search for a S&P tracker to go in it. There are a lot to choose from, one example

https://www.vanguardinvestor.co.uk/investments/vanguard-s-and-p-500-ucits-etf-usd-distributing/overview 

But it's really not a good idea to go investing money without really understanding the risks and where you are putting it

dunstonh

An S&P 500 tracker is a reasonable sole equity investment for a US based investor. It offers a reasonable level of diversification, and they would not pay any withholding tax

Although in recent times it has become a bit heavy in tech and if you look at the history of the US market it does have extended periods where it underperforms the global markets.    US investors should also consider global but in reality they dont.

dunstonh

Not at all, i.e. when choosing funds etc, myself, yourself and everyone else will look at past performance and in doing so it will play some part in making a decision about whether or not to invest in the fund.
Disagree? Then why do you bother looking at past performance?

I look at sector allocation (sector is in the UK sense - region/country).    Over 70% of my portfolio is tracker.  

S&P 500, for years the self appointed 'experts' on MSE forum have said "this year isn't a good time to invest within the S&P 500, they've had a good run for far too long, tech will perform poorly this year, Precisely what the 'experts' predicted in previous years and were wrong. 

I haven't seen those posts on MSE.   What you will see is people posting about investing 100% in the S&P500 based on recent S&P500 performance.   It just happens to have been the best investment area in this cycle.     It was amongst the worst in the previous cycle.   It is rare for any area to be the best two cycles in a row.  Yet someone going 100% into S&P500 is betting just that.

Yes, one day the 'experts' will be correct, is that this year, next year or the next decade? The 'experts' don't know, if they did they wouldn't be on this forum, they'd be relaxing on their super yacht in sunny climes.

So, if you acknowledge that you cannot know what will be best next, why would you go 100% into just one area?

GazzaBloom

The S&P500 is a solid diverse index to follow, yes the US may outperform a global tracker or it may underperform during some cycles but it will still yield healthy returns even when underperforming.

It may be Tech heavy but so is the world we live in now, Tech isn't going to decline, only increase as AI and other technologies come to the fore over the next decades.

Historically, over the long term there has little between the returns of a global tracker & US only tracker, with not a huge increase in diversification by going global in my opinion.

Most global trackers are US heavy anyway with Tech being at the top.

In hindsight, in 50 or a 100 years, it may become clear which bet was the best one but in the here and now it's hard to be sure with any certainty. The demise of capitalism in the US alone, an extended US only recession or a US only countrywide catastrophe without the ROW being affected are the only scenarios I see to the US failing to deliver reasonable returns vs the ROW.

Thrugelmir

GazzaBloom said:

It may be Tech heavy but so is the world we live in now, Tech isn't going to decline, only increase as AI and other technologies come to the fore over the next decades.

To quote the late Steve Jobs.

"Technology is nothing. What's important is that you have a faith in people, that they're basically good and smart, and if you give them tools, they'll do wonderful things with them."

GazzaBloom

Thrugelmir said:

GazzaBloom said:

It may be Tech heavy but so is the world we live in now, Tech isn't going to decline, only increase as AI and other technologies come to the fore over the next decades.

To quote the late Steve Jobs.

"Technology is nothing. What's important is that you have a faith in people, that they're basically good and smart, and if you give them tools, they'll do wonderful things with them."

True enough, but as a counter view, if you listen to Elon Musk's thoughts on AI he is worried that without pre-emptive regulation (rather than the typical post problem legislation) AI could do some fairly serious harm to people. 

Which, admittedly, does sound a bit 2:14am Eastern Time, 29th August 1997

GeoffTF

Here is some data on the UK bias of UK pension funds:

https://www.saltus.co.uk/investors-digest/home-bias-and-global-diversification-should-i-invest-in-international-equity

"Taking data from the Purple Book 2020, the simple average pension fund weighting to UK equities has fallen from 60.4% in 2008 to 26.9% in 2020. If we weight the figures by fund size, the fall is even more dramatic, from 48% UK equity weighting in 2008 to 13.3% in 2020[6]."

We could take that as the judgement of the experts. There are, however, no experts on the future. A cynic would say that they have sold UK holdings, because they had done badly in the last ten years, which may be at just the wrong time. Morningstar is currently showing VUKE (FTSE 100 tracker) as 20.3% up over the last year and VWRL (All-World tracker) as 9.4% up. VUKE leads by 9.9%.

dunstonh

The S&P500 is a solid diverse index to follow, yes the US may outperform a global tracker or it may underperform during some cycles but it will still yield healthy returns even when underperforming.

What about currency fluctuations.  In the previous cycle, the rising pound and underperforming US equities was really damaging for those heavy in US equities.

The S&P500 is not a solid diverse index.  You yourself admit it is tech heavy.

It may be Tech heavy but so is the world we live in now, Tech isn't going to decline, only increase as AI and other technologies come to the fore over the next decades.

Just as people said over 20 years ago before tech stocks fell 90% in value.

I haven't said that I would go 100% in one area. I invest universally, S&P 500 is one of my holdings. 

post #1 indicated that it would be 100% in that.