Investing in Global Trackers and other similar investments

JakeHyde

Ray_Singh-Blue said:

If you search "take a peek at my hand" you'll find a diary thread documenting my 7 year journey from gung ho chancer to supine passive- head.

Awesome, I'll have a read of this tomorrow, as it's past my bedtime.  But (without looking), it would be great if everyone would dare post what they are investing in.  I haven't invested in an index fund yet, but I hope to do so tomorrow, and if I can't decide on which index's to invest in I think I will just go for the SNP500 for this tax year, and take my time picking a number of other index's  after the 5th.

GeoffTF

JakeHyde said:

DoneWorking said:

Thrugelmir said:

DoneWorking said:

Alistair31 said:

DoneWorking said:

Alistair31 said:

How would you feel if your £175k became £130k in a downturn? 

Why do you ask

If I don't do anything with it it's spending power is going to wither away due to inflation

Because that is the risk you need to accept if you are thinking 100% equities global tracker. How would you react? 

Oh !!!!!!, I only wanted inflation protection and now I’ve lost £45k, I better sell before I lose any more… thus guaranteeing the £45k is gone. 

Obviously if I want to protect my savings from inflation I have to accept the volatility in the Global Tracker over the long term

Equities have underperformed inflation in some markets for as long as a decade previously. Add in currency exposure to a global equity fund and there's a roller coaster of a ride lying ahead. 

Thank you

This is useful information I can use when making a decision.
Are there any less volatile options than Global Trackers

Gold ETF's?   Not that I know anything about them, but I hear people talking about gold as a way to fight inflation. 🤷🏻‍♂️

Investing money in things you know nothing about is an excellent way of losing money.

JakeHyde

GeoffTF said:

Investing money in things you know nothing about is an excellent way of losing money.

That's why I'm here to learn!

tebbins

I think this thread should be bookmarked or s or something because it's a great resource for people coming at investing completely fresh, not knowing what they don't know.

DoneWorking

tebbins said:

I think this thread should be bookmarked or s or something because it's a great resource for people coming at investing completely fresh, not knowing what they don't know.

I'm learning more about what I don't know every day.
But I'm noting it all down.

I'm now starting to wonder wether I do need an IFA to set up a more comprehensive investment plan

I'd do the cash savings ladder and let them concentrate on investing the £175k

Probably make less return 
But I'm concerned at my lack of knowledge

I have started reading the various articles recommended but I can see it's going to take time to develop my knowledge to a point where I feel confident that I am making the right decisions

GazzaBloom

Thrugelmir said:

My suggestion would be to explore broader investment vehicles such as multi asset. This would provide a broader diversification of underlying investments. Less volatile as well. With an ever decreasing time horizon chasing speculative returns may not be worthwhile. Given the broader economic challenges of rising interest rates, rising inflation and QT combining. 

Over time there's always a fad for something in particular. The hype grows then momentum propels the asset class upwards in value. A self fulfilling prophecy so to speak. There's a detachment from reality, i.e. the underlying financial fundamentals of the companies themselves. With regards to global equity funds as time has past. The net returns are being generated by fewer and fewer companies. Personally I'd be wary. The pandemic and recent geo political events have shown how fragile globalisation actually is. When push comes to shove. All the old rifts and historical disagreements rapidly re-emerge. As self interest prevails. 

But don't some multi-asset funds hold those select few companies that drive the index performance as well? Apple & Microsoft not only drive the S&P500 index but also are key holdings in at least Aviva and Standard Life multi-asset default pension funds, selected to provide the capital growth for the fund.

I wouldn't consider holding an index as chasing speculative returns, a fund manager selecting a few high flying stocks to drive the capital growth of a multi-asset fund is though. 

Thrugelmir

GazzaBloom said:

Thrugelmir said:

My suggestion would be to explore broader investment vehicles such as multi asset. This would provide a broader diversification of underlying investments. Less volatile as well. With an ever decreasing time horizon chasing speculative returns may not be worthwhile. Given the broader economic challenges of rising interest rates, rising inflation and QT combining. 

Over time there's always a fad for something in particular. The hype grows then momentum propels the asset class upwards in value. A self fulfilling prophecy so to speak. There's a detachment from reality, i.e. the underlying financial fundamentals of the companies themselves. With regards to global equity funds as time has past. The net returns are being generated by fewer and fewer companies. Personally I'd be wary. The pandemic and recent geo political events have shown how fragile globalisation actually is. When push comes to shove. All the old rifts and historical disagreements rapidly re-emerge. As self interest prevails. 

But don't some multi-asset funds hold those select few companies that drive the index performance as well? Apple & Microsoft not only drive the S&P500 index but also are key holdings in at least Aviva and Standard Life multi-asset default pension funds, selected to provide the capital growth for the fund.

I wouldn't consider holding an index as chasing speculative returns, a fund manager selecting a few high flying stocks to drive the capital growth of a multi-asset fund is though. 

Multi asset will dilute the influence of a small number of companies on the potential return. The mega caps cannot grow infinitum. There's a generation of investors who've never experienced a full on bear market and volatility that accompanies it. Risk tolerance is far higher than I've ever known it in all my years of investing.

GazzaBloom

Thrugelmir said:

GazzaBloom said:

Thrugelmir said:

My suggestion would be to explore broader investment vehicles such as multi asset. This would provide a broader diversification of underlying investments. Less volatile as well. With an ever decreasing time horizon chasing speculative returns may not be worthwhile. Given the broader economic challenges of rising interest rates, rising inflation and QT combining. 

Over time there's always a fad for something in particular. The hype grows then momentum propels the asset class upwards in value. A self fulfilling prophecy so to speak. There's a detachment from reality, i.e. the underlying financial fundamentals of the companies themselves. With regards to global equity funds as time has past. The net returns are being generated by fewer and fewer companies. Personally I'd be wary. The pandemic and recent geo political events have shown how fragile globalisation actually is. When push comes to shove. All the old rifts and historical disagreements rapidly re-emerge. As self interest prevails. 

But don't some multi-asset funds hold those select few companies that drive the index performance as well? Apple & Microsoft not only drive the S&P500 index but also are key holdings in at least Aviva and Standard Life multi-asset default pension funds, selected to provide the capital growth for the fund.

I wouldn't consider holding an index as chasing speculative returns, a fund manager selecting a few high flying stocks to drive the capital growth of a multi-asset fund is though. 

Multi asset will dilute the influence of a small number of companies on the potential return. The mega caps cannot grow infinitum. There's a generation of investors who've never experienced a full on bear market and volatility that accompanies it. Risk tolerance is far higher than I've ever known it in all my years of investing.

Yes agreed, but holding the index you hold the current mega caps and their eventual replacements as they decline with no investment decisions required where a fund manager will need to make active stock picking and timing decisions as to when to change out his holdings.

If you are alluding to me being part of a generation of investors who have never experienced a bear market you are incorrect, I have been investing in stocks funds since 2003 and luckily a final salary pension before that so I've been through the 2007/8 crash and extended recovery period, I didn't panic sell, I kept dollar cost averaging in month by month.

I fail to see how index funds will be particularly disadvantaged to a multi-asset fund by a bear market, there will be no safe places to hide and a strong temperament is required. If you hold low costs equities index funds and low cost bonds index funds at a 60/40 or 70/30 ratio they are unlikely to fare much differently to a typical multi-asset managed fund, except you will be paying lower fees.

lassfarfromhome

The Meaningful Money handbook would be a good place to start learning.  Also Meaningful Money podcast, and Maven Money podcast.  Lars Kroijer videos on YouTube are excellent.

To put things very simply, assuming the right thing is to invest the money, you want to tax shelter it as much as poss through pension and ISA (allowances permitting), and put it all in a global equity tracker like VWRL.  If you think you might sell in panic in a downturn then you probably need ongoing management

cheerfulcat

DoneWorking said:

I'm learning more about what I don't know every day.
But I'm noting it all down.

I'm now starting to wonder wether I do need an IFA to set up a more comprehensive investment plan

I'd do the cash savings ladder and let them concentrate on investing the £175k

Probably make less return 
But I'm concerned at my lack of knowledge

I have started reading the various articles recommended but I can see it's going to take time to develop my knowledge to a point where I feel confident that I am making the right decisions

Yes, the cost of hiring an IFA will come out of your returns. But going DIY and making a botch of it could well cost a whole lot more, to the point of being disastrous. 

Also, you have said that you are elderly and that you simply want to protect your capital from inflation. You have had some well-meaning but I feel quite inappropriate ( given your circumstances ) suggestions here which seem to have confused the issue further. 

An IFA would be a far better source of personalised advice than a bunch of random internet people!