Investing newbie

Thrugelmir

RyanHello said:

When you learn the stock market is run on debt, it really does open your mind.

To put it simple: When interest rates are low / 0% , debt is a lot cheaper. That debt gets pumped into the stock market.
When interest rates rise debt becomes more expensive, the stock market crashes. 

Rinse and repeat every few years.

Interest rates have fallen for nigh on 40 years. BOE base rate hasn't been above 1.0% since 2009.  Simply a new era. History is littered with them. 

[Deleted User]

I've enjoyed all the comments here so far, there has been lots to think about and I think I'm certainly better prepared now. To me it's clear the balance I'm looking for is a 60:40 equity fund, I've looked at the HSBC one as an example and that seems reasonable to me; I'm more comfortable with a balanced fund rather than say splitting my own assets and having a portfolio across different platforms. I've mentioned HSBC however other platforms such as Vanguard have been mentioned, now I know what I want what should I look for in a platform? Is HSBC reasonable value for money?

older_and_no_wiser

Sandra97 said:

I've enjoyed all the comments here so far, there has been lots to think about and I think I'm certainly better prepared now. To me it's clear the balance I'm looking for is a 60:40 equity fund, I've looked at the HSBC one as an example and that seems reasonable to me; I'm more comfortable with a balanced fund rather than say splitting my own assets and having a portfolio across different platforms. I've mentioned HSBC however other platforms such as Vanguard have been mentioned, now I know what I want what should I look for in a platform? Is HSBC reasonable value for money?

The platform isn't really that important. It's what you invest in on the platform that counts.

[Deleted User]

Thanks, the one I'm considering is their multi asset fund balanced. It is 59% equity, 33 bonds, 6 property and 2 cash. The ongoing charge is 0.180% if there's any feedback on this please?

Eco_Miser

Sandra97 said:

I've enjoyed all the comments here so far, there has been lots to think about and I think I'm certainly better prepared now. To me it's clear the balance I'm looking for is a 60:40 equity fund, I've looked at the HSBC one as an example and that seems reasonable to me; I'm more comfortable with a balanced fund rather than say splitting my own assets and having a portfolio across different platforms. I've mentioned HSBC however other platforms such as Vanguard have been mentioned, now I know what I want what should I look for in a platform? Is HSBC reasonable value for money?

Don't confuse the platform and the fund manager, even if they happen to have similar names, such as Vanguard or HSBC.

You can buy Vanguard and HSBC funds on most platforms.

Probably the most important differentiator between platforms is price, and the pricing structure, see https://monevator.com/compare-uk-cheapest-online-brokers/ for  list and explanations. Obviously the platform should be FCA regulated and FSCS covered etc.

Some people like bells and whistles, or a high reputation for service (at a cost), personally I'm with Iweb for their low ongoing cost. Buy, hold, get dividends in my bank within a week of the issue date, and only buying costs (fiver a time). (For completeness selling also costs a fiver and there's a one off opening fee.)

[Deleted User]

Right, I obviously have confused platform and fund quite clearly! So just to ensure I have this right, the ISA is the product, the platform is whoever I have the ISA with, the platform can buy the fund such as the HSBC one I'm describing is that right?

[Deleted User]

I think I've just about got all this in my mind and read up on the fantastic links people have sent me. I've watched a few YouTube videos too, some were ultra newbie related and I was a bit reassured that doesn't seem to be me.

I'm about to take the plunge, I want to use stocks and shares isa allowance to invest in a Vanguard 60:40 life strategy product, the platform I'm looking at (as suggested by a couple of YouTubers for low fees) is Vanguard Investor and is at https://www.vanguardinvestor.co.uk/investing-explained/what-are-lifestrategy-funds

Has anyone got any final feedback before I take the plunge? I'm still a little nervous but now feel much more informed to the risks, my general goals and so on. The only other question I have, is there such a thing as the exact right time to start the investment or is the initial timing all just luck? If possible due to savings maturing I'll be doing it towards the end of next month.

older_and_no_wiser

That's good to hear. Glad you've kept interested and learnt stuff along the way.

I would say you can't time the best time to invest. The main thing is to get invested and keep investing. The longer the better. 

I would question why you want such a large non equity allocation that the 60/40 LifeStrategy fund gives you. It's less risky on paper but if you're in this for the long haul, a lot of people would suggest going higher with equities. Bonds aren't quite the cushion from risk they once were. If it makes you sleep better at night, fair enough.

I'd agree multi asset is the way to go for someone not fully confident in picking funds. You get a really good global spread and the Vanguard flavour gives a bit extra in the UK which may actually be a bonus with the upcoming global problems and the US tech stocks taking a hammering.

Albermarle

Sandra97 said:

Right, I obviously have confused platform and fund quite clearly! So just to ensure I have this right, the ISA is the product, the platform is whoever I have the ISA with, the platform can buy the fund such as the HSBC one I'm describing is that right?

90% there .
Some platforms have a vast range of products you can invest in.
Some platforms have a small range, often of their own brand funds, that makes it simpler to choose for some people.
Or you have ones in the middle that offer a medium size range of funds, often mainly their own, or in the case of Vanguard , only their own funds.

However even if you have a Vanguard ISA on the Vanguard platform and buy a Vanguard fund, you should be clear in your mind that the Isa , the platform and the investment fund are not the same thing. 

I'm about to take the plunge, I want to use stocks and shares isa allowance to invest in a Vanguard 60:40 life strategy product,
It is a very popular product but personally I would prefer the similar HSBC fund you were looking at . There is not much in it, but the HSBC Balanced fund has outperformed VLS 60 over the last 6 months/12 months and 5 years.
You can not hold this on the Vanguard platform - no problem with AJ Bell , Iweb etc 

JohnWinder

Has anyone got any final feedback before I take the plunge? I'm still a little nervous but now feel much more informed to the risks, my general goals and so on. The only other question I have, is there such a thing as the exact right time to start the investment or is the initial timing all just luck?

You’re making a great start to diy investing; keep nagging away at getting more knowledge and reflecting on your and other’s experiences. In a few years it’ll be Sandra (2000 posts) shedding light for other people.

1 Brace yourself for regret. In some months and years you’ll hear of others’ portfolio performances (mostly the good performances) and you might wonder if you made the right choice way back. Truly, you have tens if not hundreds of thousands of portfolio mixes you could choose now, and there is no way you’re picking the best one. In fact I doubt we’ll ever meet or even hear of the person who chose the best one; actually they probably don’t exist since there’s always something to improve a portfolio in retrospect. So get ready to handle regret if you’re one who regrets.

2 Just be careful about the belief ‘riskier assets, so expect higher returns’. True enough, when an investment is a sure thing like a bond with guaranteed interest and return of capital, everyone is happy to buy them and so the bond issuer doesn’t need to offer much interest to attract buyers, so yields are lower than other assets’. When the investment is riskier like stocks, buyers demand a higher return for taking that extra risk, so shares (with no guarantee of return like bonds have) should have more return.  Should. But think of what might happen to undermine that, so that for all the risk you took you get worse returns than safe bonds or bank deposit: if you invest in one company, its fortunes might turn quickly and you lose badly eg Kodak when digital photography arrived; or General Electric for whatever reason; or Neil Woodford’s managed fund when he lost his touch; or French equities which suffered during WW1 and took 100 years to recovery their inflation adjusted value; or the US stock market which had an inflation adjusted loss for the first decade this century. 

To get better returns we need to take more risk, but the returns are not assured. Be aware that you can lose out with stocks over many years; you need courage to stick with them for their likely inevitable recovery, or they may not recover in your timeframe so you need to be not too reliant on them or have a plan B. The diversification in a global stock fund is good protection against that, but there’s no guarantee.

There is not much in it, but the HSBC Balanced fund has outperformed VLS 60 over the last 6 months/12 months and 5 years.

I don’t know about either fund, so no opinion. But be very aware that past performance does not guarantee future performance. There are much better features to compare eg: is one index better; is there better index tracking; is there more risky stock lending?  Those issues are a bit beyond we amateurs, and there’s probably not much in it between those two funds, but don’t be seduced by past performance, if for no other reason that it might validate a feeling in the future that you should make changes to chase past performance - widely and wisely regarded as bad karma.

4 Some of the smart people write themselves an investment policy statement; you should consider it. What your plans, timelines or goals are for your investing; why you chose what; some sources of information if you need to go back and check in the future; what will cause you to change strategy or direction; why, why, why? You can then do your own hand holding when things look grim.

5 Timing of buying. Since no one knows the future of the stock or bond markets it can only be luck. As investments are supposed to go up in the long term, you should be invested for longer rather than shorter; seems logical. And since we can’t reliably predict asset prices in the future, what else have we to go on, other than that logic? Well, there is some analysis: by waiting for a 5% drop, or 10% or 30% drop we could buy cheaper hoping to make better returns. It might work in future, but it would never have worked in the past according to this analysis: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=356671&p=6196749&sid=9378de92a67b7e76ee225011c3d84d72#p6196749

Still, it can be hard to go ‘all in’ if you do regret badly, so if you’re more comfortable then trickle it in.