How much to invest in index funds?

Savingforahouse123

Albermarle said:

 I’m maximising my workplace pension.

What exactly do you mean by this?

Sorry I wrote the post a bit too quickly and didn't write this very well. I meant that I'm paying the maximum % into my workplace pension that my employer would match with. Off the top of my head I can't remember what the percentage is but if I paid more in then my employer wouldn't match anymore so I didn't see the point (as I could invest the money elsewhere ie my Vanguard fund over my workplace pension).

InvesterJones

Savingforahouse123 said:

El_Torro said:

Savingforahouse123 said:

dealyboy said:

Savingforahouse123 said:

I’m on a £21k salary due to a career change (£1500 per month take home).

I’m 28 years old with £19k left to pay on my mortgage. No debts and very low expenses as I live frugally (£700 per month outgoings).

I have £12k in savings. I’m maximising my workplace pension.

How much do you think I should put into vanguard index funds as a lump sum / how much of my monthly earnings?

I have a life strategy 100.  I have £2370 in there currently & I'm moving in £300 per month into it. Due to my age I don’t mind risk.

Hi @Savingforahouse123 ...

Sorry I'm not going to answer your question ... there will be some wise words following.

I just thought what a sensible question, do you have a personal pension such as a SIPP? and an investment ISA?

Hi no worries.

I dont have a personal pension. Just workplace pensions. 

I sort of thought my vanguard life strategy 100 is like a personal pension since pensions are invested in stocks and I just chose to open this vanguard account myself so it’s personal. Is there a major difference between this and a SIPP? 

Where is your VLS100 though? If it's not in a pension is it in an ISA? If it's just in a General Investment Account that means you will be liable for tax on any gains. If it's in a pension or ISA then you don't need to worry about tax on gains. 

Depending on your circumstances it may be better to have your investments in a pension (either your workplace pension or a separate private pension / SIPP) than an ISA. Pensions aren't accessible until you're older but they're more tax efficient than ISAs. 

You may want to look into a Lifetime ISA as well. 

Hi yes it is in an ISA so no tax on gains.

I've only recently opened this Vanguard account as I'm dipping my toes into investing so I'd rather not open lots more accounts. Having said that, if it makes/saves me money opening more then I guess I should (as we're all investing to make more money right?!). 

I'm thinking of moving £2-3k from my savings and investing that into my VLS100. Does that sound like too much/too little to you based on my finances in my OP?

My monthly outgoings are usually £900-£1000.

I think that sounds fine as a start but you would probably be OK with more, like £4k. Good that you've revised your outgoings upwards from your OP - when planning a buffer it's best not to assume a best-case scenario. 4k transfer to ISA/SIPP would leave 8K in savings, so about 8 months. Then you can just keep skimming off the excess to maintain the same balance in savings each time you are paid (though be wary of inflation causing your outgoings to increase over time and occasionally check that the buffer is still suitable).

Savingforahouse123

Exodi said:

Savingforahouse123 said:

dealyboy said:

Savingforahouse123 said:

I’m on a £21k salary due to a career change (£1500 per month take home).

I’m 28 years old with £19k left to pay on my mortgage. No debts and very low expenses as I live frugally (£700 per month outgoings).

I have £12k in savings. I’m maximising my workplace pension.

How much do you think I should put into vanguard index funds as a lump sum / how much of my monthly earnings?

I have a life strategy 100.  I have £2370 in there currently & I'm moving in £300 per month into it. Due to my age I don’t mind risk.

Hi @Savingforahouse123 ...

Sorry I'm not going to answer your question ... there will be some wise words following.

I just thought what a sensible question, do you have a personal pension such as a SIPP? and an investment ISA?

Hi no worries.

I dont have a personal pension. Just workplace pensions. 

I sort of thought my vanguard life strategy 100 is like a personal pension since pensions are invested in stocks and I just chose to open this vanguard account myself so it’s personal. Is there a major difference between this and a SIPP? 

Without meaning to sound rude, I'd do a little bit more research on all of this because your comment is somewhat confused.

Vanguard LS100 is just one of the many funds Vanguard offers that you can invest in.

If you held a pension account with Vanguard (typically called a SIPP), you are free to choose whatever investments you want, including, but not limited to VLS100.

What type of account do you have? A Stocks & Shares ISA (typicalled referred to as S&S) protects you from paying tax on your returns, on contributions up to £20k per year. A General Investment Account (typically referred to as a GIA) does not protect you from paying tax on your returns, but you can invest without limits.

To be clear, VLS100 could be held in a SIPP, S&S or GIA. Nothing about VLS100 is relevant to being a good pension product. In fact Vanguard actually offers retirement funds (called Target Retirement funds).

The reason I suggested doing more research is because VLS100 is, in my opinion, one of the worse funds on Vanguard (and I think only included to complete the VLS20, 40, 60, 80 collection). It also features a large home bias, which I'm personally not a fan of.

In my personal view, VWRL or the FTSE Global All Cap Index are both superior funds.

The above is my personal views and I'd always recommend you do your own research.

Thanks and no offence taken.

I have a Vanguard LS100 as an ISA. 

Yes I do know this fund invests a lot in the UK which is its only downfall imo. I chose this fund because I'm not planning on withdrawing for at least 20 years bare minimum. Even though the UK economy isn't forecast to look great, I'd hope in the long term (out of sight/out of being able to predict) that we'll make a recovery.

It is not invested as a pension because being in a pension means my money is locked away until retirement while how i've currently set it up means I have more flexibility/adaptability to use it for my future or I can take some capital out early should I wish.

Albermarle

Savingforahouse123 said:

Albermarle said:

 I’m maximising my workplace pension.

What exactly do you mean by this?

Sorry I wrote the post a bit too quickly and didn't write this very well. I meant that I'm paying the maximum % into my workplace pension that my employer would match with. Off the top of my head I can't remember what the percentage is but if I paid more in then my employer wouldn't match anymore so I didn't see the point (as I could invest the money elsewhere ie my Vanguard fund over my workplace pension).

The point is that any extra workplace pension contributions, will still attract tax relief, which you will not get by investing via an ISA. This tax relief will be worth an extra minimum 6.25% but can be more depending on your salary, and how the pension contributions are made and later withdrawn. 
On the other hand, as you have mentioned the money is then tied up until your late 50's.

dunstonh

I have a Vanguard LS100 as an ISA. 
Yes I do know this fund invests a lot in the UK which is its only downfall imo. 

And it's twice the cost of a global tracker.  

It is not invested as a pension because being in a pension means my money is locked away until retirement while how i've currently set it up means I have more flexibility/adaptability to use it for my future or I can take some capital out early should I wish.

But as you are investing for 20+ years, that isnt far from the retirement age range.  Are you really planning to draw the money out before age 58?    Remember that the pension tax wrapper beats the ISA tax wrapper.
Or as are under 40, have you considered the LISA tax wrapper?
Or a combination of these things.

Linton

Savingforahouse123 said:

Exodi said:

Savingforahouse123 said:

dealyboy said:

Savingforahouse123 said:

I’m on a £21k salary due to a career change (£1500 per month take home).

I’m 28 years old with £19k left to pay on my mortgage. No debts and very low expenses as I live frugally (£700 per month outgoings).

I have £12k in savings. I’m maximising my workplace pension.

How much do you think I should put into vanguard index funds as a lump sum / how much of my monthly earnings?

I have a life strategy 100.  I have £2370 in there currently & I'm moving in £300 per month into it. Due to my age I don’t mind risk.

Hi @Savingforahouse123 ...

Sorry I'm not going to answer your question ... there will be some wise words following.

I just thought what a sensible question, do you have a personal pension such as a SIPP? and an investment ISA?

Hi no worries.

I dont have a personal pension. Just workplace pensions. 

I sort of thought my vanguard life strategy 100 is like a personal pension since pensions are invested in stocks and I just chose to open this vanguard account myself so it’s personal. Is there a major difference between this and a SIPP? 

Without meaning to sound rude, I'd do a little bit more research on all of this because your comment is somewhat confused.

Vanguard LS100 is just one of the many funds Vanguard offers that you can invest in.

If you held a pension account with Vanguard (typically called a SIPP), you are free to choose whatever investments you want, including, but not limited to VLS100.

What type of account do you have? A Stocks & Shares ISA (typicalled referred to as S&S) protects you from paying tax on your returns, on contributions up to £20k per year. A General Investment Account (typically referred to as a GIA) does not protect you from paying tax on your returns, but you can invest without limits.

To be clear, VLS100 could be held in a SIPP, S&S or GIA. Nothing about VLS100 is relevant to being a good pension product. In fact Vanguard actually offers retirement funds (called Target Retirement funds).

The reason I suggested doing more research is because VLS100 is, in my opinion, one of the worse funds on Vanguard (and I think only included to complete the VLS20, 40, 60, 80 collection). It also features a large home bias, which I'm personally not a fan of.

In my personal view, VWRL or the FTSE Global All Cap Index are both superior funds.

The above is my personal views and I'd always recommend you do your own research.

Thanks and no offence taken.

I have a Vanguard LS100 as an ISA. 

Yes I do know this fund invests a lot in the UK which is its only downfall imo. I chose this fund because I'm not planning on withdrawing for at least 20 years bare minimum. Even though the UK economy isn't forecast to look great, I'd hope in the long term (out of sight/out of being able to predict) that we'll make a recovery.

It is not invested as a pension because being in a pension means my money is locked away until retirement while how i've currently set it up means I have more flexibility/adaptability to use it for my future or I can take some capital out early should I wish.

At this stage in your investing career I would not be too concerned about whether to use a pension or an ISA and exactly which global fund is chosen....

 - If you start off with an ISA you can move some or all of the money into a pension later and still get the tax benefits
 - In practice in your situation the differences between the returns from various broad global funds would be pretty small in £ terms.  For a number of years by far the greater part of the increase  in value of your pot is going to come from the contributions not the inveatment return.  When you have say £25K  invested you could then look more deeply into your strategy.  More important is to start doing something and not get stuck doing nothing because of any indecision.

adindas

Exodi said:
The reason I suggested doing more research is because VLS100 is, in my opinion, one of the worse funds on Vanguard (and I think only included to complete the VLS20, 40, 60, 80 collection). It also features a large home bias, which I'm personally not a fan of.

In my personal view, VWRL or the FTSE Global All Cap Index are both superior funds.

The above is my personal views and I'd always recommend you do your own research.

If you want to know which want perform better, all you need to do is to plot all of these funds into a long time horizon say over a few decades plot VLS100 vs VLS 20 to see the polarise view and see what you get. Please plot it over several decades, not just one decade as people should not expect that VLS100 will outperform VLS 20 all the time.

It is general truth that equity always outperform bond in the long run, so the more bond percentage you have in your portfolio the less return you will get in the long run. For people who stated VLS 20 is better than VLS100 in term of return please free plot both of them over a few decades and show what you get.

Another confirmation bias such as the long belief about excessive diversification,thinking the more diversified your portfolio is the higher return you will get. This is against the views of many proven billionaires investors views. Excessive diversification and/bond might be suitable for someone but it might not be suitable for other people. It will depend on your goal and personal circumstances.

eskbanker

adindas said:

Exodi said:
The reason I suggested doing more research is because VLS100 is, in my opinion, one of the worse funds on Vanguard (and I think only included to complete the VLS20, 40, 60, 80 collection). It also features a large home bias, which I'm personally not a fan of.

In my personal view, VWRL or the FTSE Global All Cap Index are both superior funds.

The above is my personal views and I'd always recommend you do your own research.

If you want to know which want perform better, all you need to do is to plot all of this fund into a long time horizon say over a few decades back from now and see what you get. All you need to do is to plot VLS100 and VLS 20 to see the most extreme cases and see what you get. It is general truth that equity always outperform bond in the long run, so the more bond percentage you have in your portfolio the less return you will get in the long run. For people who stated VLS 20 is better than VLS100 in term of return please free plot both of them over a few decades and see what you get..

Another confirmation bias such as the long belief about excessive diversification, the more diversification the higher return you will get, which are against the view of many proven billionaires investors views. Excessive diversification and/bond might not be suitable for someone but it might not be suitable for other people. It will depend on your goal and personal circumstances.

It's completely pointless to divert yet another thread with your favourite strawman arguments - nobody mentioned bonds, and if you're recommending that OP steers clear of the index trackers they've decided to use then what specifically are you advocating instead?

adindas

eskbanker said:

adindas said:

Exodi said:
The reason I suggested doing more research is because VLS100 is, in my opinion, one of the worse funds on Vanguard (and I think only included to complete the VLS20, 40, 60, 80 collection). It also features a large home bias, which I'm personally not a fan of.

In my personal view, VWRL or the FTSE Global All Cap Index are both superior funds.

The above is my personal views and I'd always recommend you do your own research.

If you want to know which want perform better, all you need to do is to plot all of this fund into a long time horizon say over a few decades back from now and see what you get. All you need to do is to plot VLS100 and VLS 20 to see the most extreme cases and see what you get. It is general truth that equity always outperform bond in the long run, so the more bond percentage you have in your portfolio the less return you will get in the long run. For people who stated VLS 20 is better than VLS100 in term of return please free plot both of them over a few decades and see what you get..

Another confirmation bias such as the long belief about excessive diversification, the more diversification the higher return you will get, which are against the view of many proven billionaires investors views. Excessive diversification and/bond might not be suitable for someone but it might not be suitable for other people. It will depend on your goal and personal circumstances.

It's completely pointless to divert yet another thread with your favourite strawman arguments - NOBODY mentioned BONDSds, and if you're recommending that OP steers clear of the index trackers they've decided to use then what specifically are you advocating instead?

What about this is VLS20, VLS40, 60,80 noone, no bonds??

Linton

adindas said:

eskbanker said:

adindas said:

Exodi said:
The reason I suggested doing more research is because VLS100 is, in my opinion, one of the worse funds on Vanguard (and I think only included to complete the VLS20, 40, 60, 80 collection). It also features a large home bias, which I'm personally not a fan of.

In my personal view, VWRL or the FTSE Global All Cap Index are both superior funds.

The above is my personal views and I'd always recommend you do your own research.

If you want to know which want perform better, all you need to do is to plot all of this fund into a long time horizon say over a few decades back from now and see what you get. All you need to do is to plot VLS100 and VLS 20 to see the most extreme cases and see what you get. It is general truth that equity always outperform bond in the long run, so the more bond percentage you have in your portfolio the less return you will get in the long run. For people who stated VLS 20 is better than VLS100 in term of return please free plot both of them over a few decades and see what you get..

Another confirmation bias such as the long belief about excessive diversification, the more diversification the higher return you will get, which are against the view of many proven billionaires investors views. Excessive diversification and/bond might not be suitable for someone but it might not be suitable for other people. It will depend on your goal and personal circumstances.

It's completely pointless to divert yet another thread with your favourite strawman arguments - NOBODY mentioned BONDSds, and if you're recommending that OP steers clear of the index trackers they've decided to use then what specifically are you advocating instead?

What about this is VLS20, VLS40, 60,80 no bonds, noone ??

(Re)read the thread - those funds were mentioned in the context of VLS100 being part of the VLS set.  No-one has has said anything about the OP investing in them.