We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

How much to invest in index funds?

Options
124

Comments

  • ColdIron
    ColdIron Posts: 9,829 Forumite
    Part of the Furniture 1,000 Posts Hung up my suit! Name Dropper
    edited 16 March 2023 at 11:25PM
    HL have recently reduced their LISA fees to 0.25%. Dodl are 0.15% but apparently a minimum of £12 per account so HL would probably be cheaper for a couple of years
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    edited 17 March 2023 at 2:22PM
    OP, don't over complicate things. VLS100 is a great way to invest for people who are ok with risk...Don't get too hung up about building portfolios or "home bias", it's far more important that you actually invest at a young age than worrying about the asset allocation inside VLS100. So after you have saved 6 months emergency fund in the bank put as much as you can into your pension, at least 10% of your gross salary, 20% would be great. If you can then look into an ISA, VLS100 would be just fine for that too. Keep doing that for 30 or 40 years and you will have a very comfortable retirement. Also look at that mortgage and have a plan for paying that off in a sensible way taking note of mortgage rates. FYI I am also frugal and had a very simple index fund portfolio for 30 years and saved lots into it and retired at age 54 knowing that I will never have to worry about money again. How much you save/invest is far more important than the nuances of portfolio construction as long as you get the basics right and you seem to be doing that.

    PS I assumed you had VLS100 in your workplace pension, if not find out how your pension money is invested and make sure it is appropriate for your age and risk tolerance and isn't in some expensive silly actively managed fund.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • adindas
    adindas Posts: 6,856 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 18 March 2023 at 12:36PM
    OP, don't over complicate things. VLS100 is a great way to invest for people who are ok with risk...Don't get too hung up about building portfolios or "home bias", it's far more important that you actually invest at a young age than worrying about the asset allocation inside VLS100. So after you have saved 6 months emergency fund in the bank put as much as you can into your pension, at least 10% of your gross salary, 20% would be great. If you can then look into an ISA, VLS100 would be just fine for that too. Keep doing that for 30 or 40 years and you will have a very comfortable retirement. Also look at that mortgage and have a plan for paying that off in a sensible way taking note of mortgage rates. FYI I am also frugal and had a very simple index fund portfolio for 30 years and saved lots into it and retired at age 54 knowing that I will never have to worry about money again. How much you save/invest is far more important than the nuances of portfolio construction as long as you get the basics right and you seem to be doing that.

    PS I assumed you had VLS100 in your workplace pension, if not find out how your pension money is invested and make sure it is appropriate for your age and risk tolerance and isn't in some expensive silly actively managed fund.
    I have been saying this for sometimes now.
    IMO, If your goal is to grow wealth, why on earth sensible people would want to put  their money into bonds given that:
    - It is a general truth Equity ALWAYS outperform bond. Just need to plot or the equity vs bond in a long term to prove this.
    - Just look at what a proven billionaires investors have been saying about bond in your portfolio, if your intention is to grow wealth.
    - For retail investor in the UK, you have a better alternative than bond, risk free, where could get 7%, 6.25%, reasonable number in 6.17%, 5.59% Risk free. You you could stash a large sum of money for a short duration earning 4.5%+. Literally you could have the sum up to FSCS guaranteed protection.
    I am not saying VLS is the best performing fund, but if you have chosen VSL I fail to understand the sensible reason   to invest say VLS 60 or even some people here are suggesting VLS 40, 20. I remember a few years ago when the VLS was first launched in the UK this fund is very people popular. People just following the crowd without considering that other people might have a different goal or doing DYOR. But since recently they get their finger burnt, a few are even thinking suing their own financial adviser.
    Similarly with DCA (drip-feeding) vs lump-sum investing in the bear, declining market and I have been saying this since the start of declining market. Just look people who threw their money a few hundred thousand pound early 2022. Just look at what happen now to these people.
    In the past If you  post the opinion like this you will get a heavy attack, dislike from the same group of people cheering up each other here on saving and investing board who might think they are better than the billionaires proven investors in designing strategy to grow wealth.
  • dealyboy
    dealyboy Posts: 1,933 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Hi @adindas & @bostonerimus ...
    adindas said:
    OP, don't over complicate things. VLS100 is a great way to invest for people who are ok with risk...Don't get too hung up about building portfolios or "home bias", it's far more important that you actually invest at a young age than worrying about the asset allocation inside VLS100. So after you have saved 6 months emergency fund in the bank put as much as you can into your pension, at least 10% of your gross salary, 20% would be great. If you can then look into an ISA, VLS100 would be just fine for that too. Keep doing that for 30 or 40 years and you will have a very comfortable retirement. Also look at that mortgage and have a plan for paying that off in a sensible way taking note of mortgage rates. FYI I am also frugal and had a very simple index fund portfolio for 30 years and saved lots into it and retired at age 54 knowing that I will never have to worry about money again. How much you save/invest is far more important than the nuances of portfolio construction as long as you get the basics right and you seem to be doing that.

    PS I assumed you had VLS100 in your workplace pension, if not find out how your pension money is invested and make sure it is appropriate for your age and risk tolerance and isn't in some expensive silly actively managed fund.
    I have been saying this for sometimes now.
    IMO, If your goal is to grow wealth, why on earth sensible people would want to put  their money into bonds given that:
    - It is a general truth Equity ALWAYS outperform bond. Just need to plot or the equity vs bond in a long term to prove this.
    - Just look at what a proven billionaires investors have been saying about bond in your portfolio, if your intention is to grow wealth.
    - For retail investor in the UK, you have a better alternative than bond, risk free, where could get 7%, 6.25%, reasonable number in 6.17%, 5.59% Risk free. You you could stash a large sum of money for a short duration earning 4.5%+. Literally you could have the sum up to FSCS guaranteed protection.
    I am not saying VLS is the best performing fund, but if you have chosen VSL I fail to understand the sensible reason   to invest say VLS 60 or even some people here are suggesting VLS 40, 20. I remember a few years ago when the VLS was first launched in the UK this fund is very people popular. People just following the crowd without considering that other people might have a different goal or doing DYOR. But since recently they get their finger burnt, a few are even thinking suing their own financial adviser.
    In the past If you  post the opinion like this you will get a heavy attack, dislike from the same group of people cheering up each other here on saving and investing board who might think they are better than the billionaires proven investors in designing strategy to grow wealth.
    ... I have HSBC GS Dynamic and Balanced giving an effective 70% equities.

    I think as with the VLS LS series it's obviously a matter of risk (or has been) but also a matter of term. I think high equity funds, ETFs for buy and forgetters are suitable for the long/very long term investor, as you say VLS 100 or GS Adventurous.

    We who have much less time (I'm an OAP) would be wise (that's not me) to go down the risk scale, to hopefully reduce volatility for a short term outlook. Of course bonds are used to squash that curve, or that's the theory.

    I personally have a 7-year outlook and also use RS offering @7%, 6.17% etc. I do think we're in special times though and suspect a big review in 12 months time will be needed.
  • adindas
    adindas Posts: 6,856 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 18 March 2023 at 1:48PM
    dealyboy said:
    Hi @adindas & @bostonerimus ...
    adindas said:
    OP, don't over complicate things. VLS100 is a great way to invest for people who are ok with risk...Don't get too hung up about building portfolios or "home bias", it's far more important that you actually invest at a young age than worrying about the asset allocation inside VLS100. So after you have saved 6 months emergency fund in the bank put as much as you can into your pension, at least 10% of your gross salary, 20% would be great. If you can then look into an ISA, VLS100 would be just fine for that too. Keep doing that for 30 or 40 years and you will have a very comfortable retirement. Also look at that mortgage and have a plan for paying that off in a sensible way taking note of mortgage rates. FYI I am also frugal and had a very simple index fund portfolio for 30 years and saved lots into it and retired at age 54 knowing that I will never have to worry about money again. How much you save/invest is far more important than the nuances of portfolio construction as long as you get the basics right and you seem to be doing that.

    PS I assumed you had VLS100 in your workplace pension, if not find out how your pension money is invested and make sure it is appropriate for your age and risk tolerance and isn't in some expensive silly actively managed fund.
    I have been saying this for sometimes now.
    IMO, If your goal is to grow wealth, why on earth sensible people would want to put  their money into bonds given that:
    - It is a general truth Equity ALWAYS outperform bond. Just need to plot or the equity vs bond in a long term to prove this.
    - Just look at what a proven billionaires investors have been saying about bond in your portfolio, if your intention is to grow wealth.
    - For retail investor in the UK, you have a better alternative than bond, risk free, where could get 7%, 6.25%, reasonable number in 6.17%, 5.59% Risk free. You you could stash a large sum of money for a short duration earning 4.5%+. Literally you could have the sum up to FSCS guaranteed protection.
    I am not saying VLS is the best performing fund, but if you have chosen VSL I fail to understand the sensible reason   to invest say VLS 60 or even some people here are suggesting VLS 40, 20. I remember a few years ago when the VLS was first launched in the UK this fund is very people popular. People just following the crowd without considering that other people might have a different goal or doing DYOR. But since recently they get their finger burnt, a few are even thinking suing their own financial adviser.
    In the past If you  post the opinion like this you will get a heavy attack, dislike from the same group of people cheering up each other here on saving and investing board who might think they are better than the billionaires proven investors in designing strategy to grow wealth.
    ... I have HSBC GS Dynamic and Balanced giving an effective 70% equities.

    I think as with the VLS LS series it's obviously a matter of risk (or has been) but also a matter of term. I think high equity funds, ETFs for buy and forgetters are suitable for the long/very long term investor, as you say VLS 100 or GS Adventurous.

    We who have much less time (I'm an OAP) would be wise (that's not me) to go down the risk scale, to hopefully reduce volatility for a short term outlook. Of course bonds are used to squash that curve, or that's the theory.

    I personally have a 7-year outlook and also use RS offering @7%, 6.17% etc. I do think we're in special times though and suspect a big review in 12 months time will be needed.
    dealyboy I do not have any knowledge of HSBC GS Dynamic so prefer not to comment it. I personally have VLS100 right from the beginning as I prefer not to just follow the crowd. Also I invest in other index funds, no bond, along with individual stocks for trading.
    What people might  fail to see here is that if you have say £100k investment, and you have £80k in equity and £20k in high interest easy access or short term saving (maximum one year say) it is actually work like VLS80 even in reality you invest 100% in equity., higher yield you currently get with bonds but risk free.
    IMO, the bear, declining market could only turn to become a bull market if all of the problems causing these bear market in the first instance cease to exist. A few to name is Inflationary rate causing the central bank to keep raising the interest rate, keep maintaining hawkish narration, the war in Ukraine, global supply chain shortages, energy/food, China geopolitical risk. Until all of these things have been clear up expect volatility to keep continue. The history the duration of bear market typically last less than three years. 
    So in the meanwhile you could keep DCA (drip feeding in small chunks) VS LSI (Lumsump investment) during the uncertainty while your money nicely earning @7%, 6.17% etc for a short duration waiting allocation to equity by DCA (Drip-feeding) aiming for the long run. Better if people combine it with technical analysis, indicators the right time to buy within the channel. In the past when you start saying like this you will get heavy attack by the same group of people as That is timing the market and people should throw their money even a few hundred grands in one go even you know there are a lot of crocodile on the river waiting for you. In the meanwhile there is no evidence those who suggested people to throw a few hundreds grands in the market like this have done it themselves.
    Many strategists have been saying that for many years. You don't need a sophisticated research to find out that those who have been doing this in the market like this are beating the return from the market.
  • dealyboy
    dealyboy Posts: 1,933 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Thank you for that @adindas and I agree with your final paragraph.

    I think the general investing messaging today is there to protect people from themselves. I time the market and generally pretty accurately with lump sums, I am not negatively emotionally affected by short term losses, they are expected.

    I was quite successful as a futures 'investor'/'trader' at one time but I saw the panicky behaviour of many unsuited to the 'front line'.
  • Prism
    Prism Posts: 3,847 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    adindas said:

    I have been saying this for sometimes now.
    IMO, If your goal is to grow wealth, why on earth sensible people would want to put  their money into bonds given that:
    - It is a general truth Equity ALWAYS outperform bond. Just need to plot or the equity vs bond in a long term to prove this.
    - Just look at what a proven billionaires investors have been saying about bond in your portfolio, if your intention is to grow wealth.
    - For retail investor in the UK, you have a better alternative than bond, risk free, where could get 7%, 6.25%, reasonable number in 6.17%, 5.59% Risk free. You you could stash a large sum of money for a short duration earning 4.5%+. Literally you could have the sum up to FSCS guaranteed protection.

    It mainly comes down to recognizing that we are all different and have different goals. It is true that equities have historically been the best place to grow your wealth, but that comes with volatility and uncertainty. Some people cannot cope with the journey along the way, may well panic, and from that make decisions that actually make their investments perform worse rather than better. There is no point in someone investing in 100% equities if they sell out during or after a downturn, or hold off during bear markets and then buy in only during the later stages of bull markets. Unfortunately, the evidence suggests that is what a lot of people do. 

    One way of reducing the effect of equity crashes is to invest in something that might move in the opposite direction (not always) and with less overall volatility - yet still provide some return. That thing has historically been bonds. Bonds are not in funds like VLS 80/60/40 to grow wealth - they are there to help people ignore the volatility of the equity markets.

    The other part is that a significant amount of us have already grown our wealth using a high percentage of equities and now we are moving into the next phase of spending it (without running out). The long term growth that comes with 100% equities is no longer required. It might require a different type of thinking that combines equities with other assets, including bonds and cash.

    On cash savings. Many people invest through their workplace pensions and SIPPs. They do not have access to higher interest savings accounts in those. Money market and shorter duration bond funds provide a reasonable equivalent. 
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    edited 19 March 2023 at 5:52AM
    adindas said:
    OP, don't over complicate things. VLS100 is a great way to invest for people who are ok with risk...Don't get too hung up about building portfolios or "home bias", it's far more important that you actually invest at a young age than worrying about the asset allocation inside VLS100. So after you have saved 6 months emergency fund in the bank put as much as you can into your pension, at least 10% of your gross salary, 20% would be great. If you can then look into an ISA, VLS100 would be just fine for that too. Keep doing that for 30 or 40 years and you will have a very comfortable retirement. Also look at that mortgage and have a plan for paying that off in a sensible way taking note of mortgage rates. FYI I am also frugal and had a very simple index fund portfolio for 30 years and saved lots into it and retired at age 54 knowing that I will never have to worry about money again. How much you save/invest is far more important than the nuances of portfolio construction as long as you get the basics right and you seem to be doing that.

    PS I assumed you had VLS100 in your workplace pension, if not find out how your pension money is invested and make sure it is appropriate for your age and risk tolerance and isn't in some expensive silly actively managed fund.
    I have been saying this for sometimes now.
    IMO, If your goal is to grow wealth, why on earth sensible people would want to put  their money into bonds given that:
    - It is a general truth Equity ALWAYS outperform bond. Just need to plot or the equity vs bond in a long term to prove this.
    - Just look at what a proven billionaires investors have been saying about bond in your portfolio, if your intention is to grow wealth.
    - For retail investor in the UK, you have a better alternative than bond, risk free, where could get 7%, 6.25%, reasonable number in 6.17%, 5.59% Risk free. You you could stash a large sum of money for a short duration earning 4.5%+. Literally you could have the sum up to FSCS guaranteed protection.
    I am not saying VLS is the best performing fund, but if you have chosen VSL I fail to understand the sensible reason   to invest say VLS 60 or even some people here are suggesting VLS 40, 20. I remember a few years ago when the VLS was first launched in the UK this fund is very people popular. People just following the crowd without considering that other people might have a different goal or doing DYOR. But since recently they get their finger burnt, a few are even thinking suing their own financial adviser.
    Similarly with DCA (drip-feeding) vs lump-sum investing in the bear, declining market and I have been saying this since the start of declining market. Just look people who threw their money a few hundred thousand pound early 2022. Just look at what happen now to these people.
    In the past If you  post the opinion like this you will get a heavy attack, dislike from the same group of people cheering up each other here on saving and investing board who might think they are better than the billionaires proven investors in designing strategy to grow wealth.
    It might be a good time to buy bond funds now that the prices are down. If you have funds and expect to keep them for some time roughly equal to their average duration or longer you should be ok. The folks that have been messed up are those retirees or close to retirement in funds that adjusted with age to emphasize Gilts and long bonds. They have double digit percentage losses and will have a smaller pot to draw on and don't have the time to recover. Of course with rates high their money will buy more annuity income than before - if that's what the want to do.

    You need a portfolio that is appropriate to your financial goals. If you are young and want growth then VLS100 is ok. As you age you might want less volatility and in fast moving interest rate times bonds won't give you that, but a 5 years savings ladder looks good right now. Just don't put all your eggs in one basket.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • P933alilli
    P933alilli Posts: 398 Forumite
    Ninth Anniversary 100 Posts
    So , reading with interest as im retired, 60, paying £2880 into my dc pension and have just over £26000 in VLS60 which i opened at the end of january 2022 and planned to hold for 10 years.My VLS is c.4.5% down. With the finances i have i could potentially up the vls to £40k maximum and then just leave it. But because i'm slightly nervous i'm just considering putting my £14k into a cash isa. I already have £45k in a fixed rate bond of 5.1% for 5 years and also have a fixed rate bond with £40 maturing in june. I'm forecast to get full state pension in c.7 years.
        Obviously i want what would give the best outcome. It made sense to go for vls60 from my risk profile and it may be best just to leave it like that. But then part of me saying forget the bonds and maybe some type of savings ladder?
  • dealyboy
    dealyboy Posts: 1,933 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Hi @Collyflower1 ...
    So , reading with interest as im retired, 60, paying £2880 into my dc pension and have just over £26000 in VLS60 which i opened at the end of january 2022 and planned to hold for 10 years.My VLS is c.4.5% down. With the finances i have i could potentially up the vls to £40k maximum and then just leave it. But because i'm slightly nervous i'm just considering putting my £14k into a cash isa. I already have £45k in a fixed rate bond of 5.1% for 5 years and also have a fixed rate bond with £40 maturing in june. I'm forecast to get full state pension in c.7 years.
        Obviously i want what would give the best outcome. It made sense to go for vls60 from my risk profile and it may be best just to leave it like that. But then part of me saying forget the bonds and maybe some type of savings ladder?
    ... you are clearly following a sensible path much advocated by those who follow passive investing such as those on the https://monevator.com/category/investing/passive-investing-investing/ blog.

    One question for clarification ... you are paying £2880 into your pension because you have no earnings presumably, but you are thinking of adding £14k to the VLS60 fund, is that in a S&S ISA?

    I cannot give advice or even imply it, but I think for a 10 year 'invest and forget' timeframe a supposedly slightly riskier approach could be employed in your Vanguard portfolio.

    As far as bonds vs cash vs equity is concerned you are 95k : 14k : 16k (deconstructing the VLS60) whereas a passive approach might well consider 36k : 14k : 75k reasonable for the timeframe dependent on your risk appetite, the 36k + 75k could be achieved by VLS60 alone, leaving 14k cash/emergency fund.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.6K Spending & Discounts
  • 244K Work, Benefits & Business
  • 598.9K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.3K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.