First Time DIY Portfolio

JohnWinder

Bostonerimus1 said:

dunstonh said:

so I could always create an account on Vanguard instead I guess and do it there.  

That would restrict you to Vanguard funds.  So, a whole of market platform would likely be better as Vanguard are not the best option in every area. 

You don't need a platform that gives you access to everything. You can do just fine with only Vanguard funds, or Fidelity or HSBC or any combination.

But you are not in the UK.   The OP is.  Vanguard is not as strong here.   The OP wants to focus on cost.   Going restricted from Vanguard will not be the optimal solution.

You may have detected there’s a bit of Vanguard feeling around here. It’s just a trans-Atlantic thing, nothing personal and not much to do with Vanguard.

Vanguard are not the best option in every area. 

Likely true, but a bit of critical thinking time….and it’s the same every time there’s a difference claimed:
How are we measuring ‘best option’, and how accurate is the measurement? When we know there is a difference, how big is the difference, because small differences don’t matter as much as big ones.

JohnWinder

As if it wasn’t difficult enough already here’s a bit more grist.

Ultimately, and five years from retirement is not far away, what you’re trying to do it provide some spending money from your investments; I won’t call it ‘income’ since it doesn’t have to be only dividends and interest, but also capital. Unless you’re very rich, it comes down to providing somewhat similar amounts of spending money each year from a portfolio which can vary in value a lot more each year, threatening your peace of mind and ability to not die broke. Steady spending from a volatile source; that’s trying to make a silk purse out of a sow’s ear to some extent, hence the 4% rules that don’t always work or work badly the other way etc.

There’s a different approach to risk management, some call it liability driven investing. Some pros and cons in discussion are here: https://www.bogleheads.org/forum/viewtopic.php?p=7530622#p7530622

Bostonerimus1

dunstonh said:

You don't need a platform that gives you access to everything. You can do just fine with only Vanguard funds, or Fidelity or HSBC or any combination.

Why restrict to one fund house when you know there are limitations when you can use a whole of market platform that allows you to pick the best options from the marketplace?

 Choice can sometimes lead to paralysis.

It can.  But that if you know what you want you filter out the rest and leave yourself with what you are after.   

I've done ok with Vanguard funds and have not bought anything else for the past 20 years so with your two fund portfolio a simple Vanguard account would work...as would an infinite number of other platform and fund combinations.

But you are not in the UK.   The OP is.  Vanguard is not as strong here.   The OP wants to focus on cost.   Going restricted from Vanguard will not be the optimal solution.

I'm glad you are focussing on costs. The OP has a refreshingly simple portfolio and they should implement it as inexpensively as possible. They don't need to complicate things. Vanguard will work, as will other platforms and similar global equity and bond funds. They should now think about strategic management of their portfolio, ie what do they do when it is up or down in value by some thresholds? Also how they might change the portfolio as their long term circumstances change. 

RichardS

Thanks @JohnWinder, I really appreciate the advice and the time you (and others in this forum) take to provide help and guidance to people like me!  I will keep reading and learning. 

My latest Draft Portfolio in InvestEngine now consists of two funds:

Vanguard FTSE All-World (VWRP) 60%
Vanguard Global Aggregate Bonds (VAGS) 40%

(the above might change of course as I learn more but that’s what I have right now)

Whether or not I am brave enough to invest anything into that only time will tell. My current thinking is I am feeling brave enough to put my £25k ISA into it but not (yet) brave enough to transfer my £200k pension into it.  

BTW I looked at my pension allocation I currently pay my FA £3k a year in fees to manage and it looked to me like it’s around 60% equities, 20% bonds and 20% other stuff.  

RichardS

Bostonerimus1 said:

dunstonh said:

You don't need a platform that gives you access to everything. You can do just fine with only Vanguard funds, or Fidelity or HSBC or any combination.

Why restrict to one fund house when you know there are limitations when you can use a whole of market platform that allows you to pick the best options from the marketplace?

 Choice can sometimes lead to paralysis.

It can.  But that if you know what you want you filter out the rest and leave yourself with what you are after.   

I've done ok with Vanguard funds and have not bought anything else for the past 20 years so with your two fund portfolio a simple Vanguard account would work...as would an infinite number of other platform and fund combinations.

But you are not in the UK.   The OP is.  Vanguard is not as strong here.   The OP wants to focus on cost.   Going restricted from Vanguard will not be the optimal solution.

I'm glad you are focussing on costs. The OP has a refreshingly simple portfolio and they should implement it as inexpensively as possible. They don't need to complicate things. Vanguard will work, as will other platforms and similar global equity and bond funds. They should now think about strategic management of their portfolio, ie what do they do when it is up or down in value by some thresholds? Also how they might change the portfolio as their long term circumstances change. 

Thanks for this. My plan I think would be to keep the adjustments very simple - just like the portfolio. I was thinking of starting out 60/40 and then on my birthday each year adjust that percentage by 1% or something. So on my next birthday I would make it a 59/41 portfolio, then the following year a 58/42 split and so on.  I’m 57 now by the way. Does that sound silly?  Or sensible? 😀

MK62

RichardS said:

MK62 said:

Vanguard do a range of global bond index funds and ETFs.......perhaps the one that best fits best with the single diversified bond fund theme, is the Vanguard Global Bond Index fund.

BTW, that fund is held in the Lifestrategy series of "fund of funds" offerings (apart from VLS100 of course as thats 100% equities)

Ah ok thanks. That’s probably not on InvestEngine. I’ve not actually invested anything yet though so I could always create an account on Vanguard instead I guess and do it there.  So basically I could have their two Index funds in a two fund portfolio and save on fees.  My big issue is deciding on the allocation % as when it comes down to it (when my own money is concerned) I think I would find it difficult to decide. I can’t get my head around how I work out my approach to risk. 

Investengine is ETF only, so you won't find any OEIC funds on there..........however, you will find several Global Aggregate Bond ETFs which might be suitable (the Aggregate Bond Index they track differs from a Universal Bond Index primarily as the Aggregate index carries only investment grade bonds..........the other carries a small amount of high yield bonds too (high yield, as they are higher risk, and so classified as sub-investment-grade)). As these Aggregate Bond ETFs appear to be tracking the same index, and have similar charges, the returns will very likely be very similar, so I wouldn't get too hung up on the supplier myself.....personally I'd pick a currency hedged accumulating candidate.
Pair with a Global Equity ETF and you'd have a pretty well diversified two fund solution......as to the split, only you can decide that tbh........there's no right or wrong answer.......my only advice would be to try to be honest with yourself about your risk attitude and what you'd do if/when your portfolio value starts to plummet......

All that said, have you considered a low cost platform with one (maybe two if it's pension and ISA) of the volatility managed multi asset funds, such as HSBC Global Strategy, or similar offerings from Blackrock, CT etc.......might be an even simpler solution for you.....

RichardS

Thanks @MK62 I had not looked at the HSBC managed portfolios.  I will take a look. 

Pat38493

RichardS said:

Thanks @JohnWinder, I really appreciate the advice and the time you (and others in this forum) take to provide help and guidance to people like me!  I will keep reading and learning. 

My latest Draft Portfolio in InvestEngine now consists of two funds:

Vanguard FTSE All-World (VWRP) 60%
Vanguard Global Aggregate Bonds (VAGS) 40%

(the above might change of course as I learn more but that’s what I have right now)

Whether or not I am brave enough to invest anything into that only time will tell. My current thinking is I am feeling brave enough to put my £25k ISA into it but not (yet) brave enough to transfer my £200k pension into it.  

BTW I looked at my pension allocation I currently pay my FA £3k a year in fees to manage and it looked to me like it’s around 60% equities, 20% bonds and 20% other stuff.  

The Vanguard FTSE all world fund is a popular fund which I hold as well.  There are other very similar funds from HSBC and others which are cheaper and have performed better in recent times, but that doesn't mean they will perform better in future.

For bonds - having a global bonds fund is ok but you need to check if it's hedged - many would argue that you don't want to be exposed to currency risk in the bonds part.  Alternatively quite a lot of people invest in a UK only bond fund (I think Vanguard has one) - the argument being that the UK government and very large companies is pretty safe for bonds, and then per definition you are hedged.

shortseller09

RichardS said:

My latest Draft Portfolio in InvestEngine now consists of two funds:

Vanguard FTSE All-World (VWRP) 60%
Vanguard Global Aggregate Bonds (VAGS) 40%

You realise VAGS is the accumulating version of VAGP (your first post)?

RichardS

shortseller09 said:

RichardS said:

My latest Draft Portfolio in InvestEngine now consists of two funds:

Vanguard FTSE All-World (VWRP) 60%
Vanguard Global Aggregate Bonds (VAGS) 40%

You realise VAGS is the accumulating version of VAGP (your first post)?

Yes, I wanted accumulating funds