Vanguard funds - which to choose

jwelly

Hello,

After doing some research I've decided to open a S&S ISA with Vanguard and invest in a fund. I'm leaning towards the FTSE Global All Cap, but I was keen to hear any tips or alternatives, such as the LifeStrategy funds.

Here is a bit about me and what I'm looking for:

• No previous investing experience
• In my early thirties
• £20k + savings
• Mid-long term investment (5 years at least)
• Med risk, perhaps med-high
• Planning a £1,500 initial investment, then drip feed a couple hundred monthly.

Any input would be greatly appreciated!

Linton

You seem to be doing things backwards in that the recommened process is to choose how you want to invest, then choose the provider/fund(s) and finally choose the platform.  However given your choices if I had to choose one index fund for the very long term it would be Vanguard FTSE Global All Cap since it has the widest remit and is 100% equity which iwould be expected to provide the best return.

In choosing that fund you need to be prepared to continue investing through 40% or more falls because that is what you will meet one day.

If you wanted something less exciting I would not propose a Vanguard fund.

Albermarle

For long term investments, pension is better than S&S ISA in most cases due to the tax relief. However it will be 25 years before you can access the money ( for your early retirement maybe) 
If you have not bought a property yet you could look at a LISA instead of an S&S ISA ?

Audaxer

jwelly said:

Hello,

After doing some research I've decided to open a S&S ISA with Vanguard and invest in a fund. I'm leaning towards the FTSE Global All Cap, but I was keen to hear any tips or alternatives, such as the LifeStrategy funds.

Here is a bit about me and what I'm looking for:

• No previous investing experience
• In my early thirties
• £20k + savings
• Mid-long term investment (5 years at least)
• Med risk, perhaps med-high
• Planning a £1,500 initial investment, then drip feed a couple hundred monthly.

Any input would be greatly appreciated!

At your age, investing in a 100% equity fund is okay but would be classed as high risk as you have to be prepared for 40% equity falls from time to time. That should be a good thing if you are paying in monthly as you will be buying funds at cheaper prices at equity crash times. If you do not think you can cope with that sort of volatility, you might be better picking one of the medium risk Life Strategy funds instead.

bostonerimus

Investing in funds inside an ISA is good, but make sure you are also investing in any company pension you have to get the company contributions and tax advantages and that you have saved at least 6 months spending in the bank for emergencies.
As you say you are medium to medium/high risk tolerant and are quite young I would go with VLS60 or VLS80. They will give you a very diverse portfolio in a single fund that will automatically rebalance through market ups and downs.

jwelly

Linton said:

You seem to be doing things backwards in that the recommened process is to choose how you want to invest, then choose the provider/fund(s) and finally choose the platform.

I based my decision on recommendations on various forums particularly for those with no experience and who don't want to spend lots of time monitoring their stock values daily. Here's a bit more about what I'm looking for:

• Start with £1,000 in a medium-risk fund, top it up a little bit monthly and forget about it for a few years (less than 10 years) to ride out market fluctuations. 
• Not a homeowner yet
• I'm basically trying to deviate away from cash ISAs given the low interest rates and high inflation.

It was the FTSE Global All Cap that was being recommended the most, but I'm open to suggestions other than Vanguard, of course.

Albermarle said:

For long term investments, pension is better than S&S ISA in most cases due to the tax relief. However it will be 25 years before you can access the money ( for your early retirement maybe) 
If you have not bought a property yet you could look at a LISA instead of an S&S ISA ?

I already have a pension with my employer, and as you said I'd like to access some invested money before I retire. I'm considering topping up my pension with a one-off payment, is this worth doing or would I not get tax relief?

Audaxer said:

At your age, investing in a 100% equity fund is okay but would be classed as high risk as you have to be prepared for 40% equity falls from time to time. That should be a good thing if you are paying in monthly as you will be buying funds at cheaper prices at equity crash times. If you do not think you can cope with that sort of volatility, you might be better picking one of the medium risk Life Strategy funds instead.

Thanks a lot, I'll definitely look into the VLS60 fund. I plan to top up about £100 a month.

Eyeful

If you are going to look into the Vanguard Life Strategy Fund, the following may be of interest to you.
https://monevator.com/passive-fund-of-funds-the-rivals/

Albermarle

I already have a pension with my employer, and as you said I'd like to access some invested money before I retire. I'm considering topping up my pension with a one-off payment, is this worth doing or would I not get tax relief?

You can make gross contributions ( means including the tax relief) up to the level of your salary, so normally a top up is not an issue, unless it is a big one.

The best way to do it depends on how your contributions are normally paid. There are three different ways.

Salary sacrifice - you get a lower salary and the employer makes all the contribution for you ( including their own)

Net pay - the contribution is taken out before tax is taken

Relief at source- the contribution is taken out of your taxed salary and the pension provider adds the tax relief.

grumiofoundation

Deleted_User said:

I like VWRL and you can get a S&S ISA through freetrade for  £3 a month 

Why would you want to pay £36 a year for an ISA with freetrade when it would cost roughly a tenth of that with vanguard for the amounts the OP would be investing? 

Aminatidi

jwelly said:

Hello,

After doing some research I've decided to open a S&S ISA with Vanguard and invest in a fund. I'm leaning towards the FTSE Global All Cap, but I was keen to hear any tips or alternatives, such as the LifeStrategy funds.

Here is a bit about me and what I'm looking for:

• No previous investing experience
• In my early thirties
• £20k + savings
• Mid-long term investment (5 years at least)
• Med risk, perhaps med-high
• Planning a £1,500 initial investment, then drip feed a couple hundred monthly.

Any input would be greatly appreciated!

Your appetite for volatility is probably the most important thing here.

If you're comfortable with the sort of swings you could see with 100% equities FTSE Global All Cap is a perfectly sensible choice.

At the risk of patronising you I would say to bear in mind that what you think you can stomach and what you can actually stomach can turn out to be two different things.

jwelly

Thanks a lot for all your comments.

Eyeful said:

If you are going to look into the Vanguard Life Strategy Fund, the following may be of interest to you.
https://monevator.com/passive-fund-of-funds-the-rivals/

An interesting read, so thanks very much. I'm leaning more towards VLS now for sure. Either 40 or 60.

Aminatidi said:

Your appetite for volatility is probably the most important thing here.

If you're comfortable with the sort of swings you could see with 100% equities FTSE Global All Cap is a perfectly sensible choice.

At the risk of patronising you I would say to bear in mind that what you think you can stomach and what you can actually stomach can turn out to be two different things.

Agreed, thanks for the tip..

I've basically decided that I don't really want high risk for the time being. I would just like to start my journey investing without keeping tabs of my funds every hour, but also to not rely on savings accounts given the interest rate and inflation.

Still, I will research other options a bit more before committing to Vanguard.