Advice with First-Time Investing

kempiejon

justme8786 said:
It sounds good but I think my mum already has a SIPP, soon to be in my name, which mainly invests into that exact fund haha maybe not the best idea to have it twice.

justme8786 said:

First time investing solo. I already have some investments in an ISA but these are ones that my (wonderful) mum set up for me ages ago and I am only now starting to really look into my finances. She died recently so there is a lot to try to manage at the moment as well as starting uni.

The ones I have there are all active investments: European Assets Trust PLC, The Global Smaller etc. From the research I have done so far, a more passive approach would be preferred, with less individual funds. I am thinking of selling all the ones I have and buying an 80/20 stocks & bonds mix, just with something like HSBC All World Index plus some GILTS for a little stability. 

I will be adding to this ISA as much as I can.

Would this do or is more diversification necessary? My age is 20 so hopefully I have a long horizon. Thank you

No rush, you're 20 and as you say there's a long horizon to invest. You could look at what's in the SIPP and what's in your ISA and hang on to them all for now but see how they fit into that 80:20 ratio. Presumably mum had good intentions buying them for you but you've indcated you want to sell. Can I suggest hanging on, make your own plan but don't rush to sell up and buy a tracker. Perhaps you'll look back in years to come at the beggining of your investing career started by this inheritance. Can/has the SIPP been generating an income that you'll be taking?
You'll be building your own SIPP and ISA from now on, for decades, perhaps revisit the inherited products in a few months or so - you've enough on just now - unless there is a pressing need to release cash. Take a breath.

thunderroad88

At your age I wouldn’t be bothering with gilts or bonds at all. I’d go 100% equity. Unless you are thinking that you will need a certain amount of money available in five years time in which case yes, keep that amount out of equities and in gilts or mmfs. Bonds imo are not for anyone who is more than ten years from retirement.

Voyager2002

Sorry to hear about your loss.

The answer to your question depends on your investment goals. Is this the beginning of your pension journey? Is the goal to save enough so that when you are in your mid-thirties you will be able to buy a home? Or perhaps you would like to go to university or take some full-time training within the next few years. Each of these goals would require a different investing approach for it to be realised.

justme8786

kempiejon said:

justme8786 said:
It sounds good but I think my mum already has a SIPP, soon to be in my name, which mainly invests into that exact fund haha maybe not the best idea to have it twice.

justme8786 said:

First time investing solo. I already have some investments in an ISA but these are ones that my (wonderful) mum set up for me ages ago and I am only now starting to really look into my finances. She died recently so there is a lot to try to manage at the moment as well as starting uni.

The ones I have there are all active investments: European Assets Trust PLC, The Global Smaller etc. From the research I have done so far, a more passive approach would be preferred, with less individual funds. I am thinking of selling all the ones I have and buying an 80/20 stocks & bonds mix, just with something like HSBC All World Index plus some GILTS for a little stability. 

I will be adding to this ISA as much as I can.

Would this do or is more diversification necessary? My age is 20 so hopefully I have a long horizon. Thank you

No rush, you're 20 and as you say there's a long horizon to invest. You could look at what's in the SIPP and what's in your ISA and hang on to them all for now but see how they fit into that 80:20 ratio. Presumably mum had good intentions buying them for you but you've indcated you want to sell. Can I suggest hanging on, make your own plan but don't rush to sell up and buy a tracker. Perhaps you'll look back in years to come at the beggining of your investing career started by this inheritance. Can/has the SIPP been generating an income that you'll be taking?
You'll be building your own SIPP and ISA from now on, for decades, perhaps revisit the inherited products in a few months or so - you've enough on just now - unless there is a pressing need to release cash. Take a breath.

Haha thank you thank you, breaths taken. Yes you are right probably best to slow it down a bit. No pressing needs. I just don't want this money hanging around in questionable places when it could be better off elsewhere.

The SIPP I plan to transfer into my name and leave untouched for my pension. I have doubts about the individual funds though, I've received paperwork and it looks like some aren't doing so well. Maybe I just leave it anyway. 

Regarding the ISA, there is just so much I've read about it being wise not to have actively managed funds due to the high fees and unlikeliness of 'beating the market', which is why I am considering selling. 

But you're right maybe I just leave it all where it is and if I want to try the All World Index passive investment I do it with money I will earn myself. But I'm worried that this way I'd be diluting potential cumulative gains.

justme8786

thunderroad88 said:

At your age I wouldn’t be bothering with gilts or bonds at all. I’d go 100% equity. Unless you are thinking that you will need a certain amount of money available in five years time in which case yes, keep that amount out of equities and in gilts or mmfs. Bonds imo are not for anyone who is more than ten years from retirement.

Ah thank you! 

justme8786

Eyeful said:

You are doing OK for someone of 20 years old.
The should be of interest to you. Hope it is of help to you.

1. https://www.kroijer.com/
2. https://monevator.com/passive-fund-of-funds-the-rivals/
3. https://monevator.com/best-global-tracker-funds/

4. Idea of Global Multi Asset Fund.
https://www.youtube.com/watch?v=lGQ9KyQq8Jw

Thank you so much!! I've actually been looking for the Lars Kroijer guy because I remembered finding his videos useful but had forgotten his name, so you helped me there.

kempiejon

justme8786 said:

The SIPP I plan to transfer into my name and leave untouched for my pension. I have doubts about the individual funds though, I've received paperwork and it looks like some aren't doing so well. Maybe I just leave it anyway. 

Regarding the ISA, there is just so much I've read about it being wise not to have actively managed funds due to the high fees and unlikeliness of 'beating the market', which is why I am considering selling. 

But you're right maybe I just leave it all where it is and if I want to try the All World Index passive investment I do it with money I will earn myself. But I'm worried that this way I'd be diluting potential cumulative gains.

Did your mum know more about stocks and funds than you do? She might have been investing for her own needs which will be different to your own but you won't be far wrong by hanging on.
If you're interested in the opinion of faceless idiots online post a list of all the funds and percentages in each in the ISA and the SIPP I'm sure they'll be opinions.
I agree though, an all world passive tracker will collect just under market return after fees and is easy and generally actively managed funds long term don't do better than that for a larger fee.

justme8786

kempiejon said:

justme8786 said:

The SIPP I plan to transfer into my name and leave untouched for my pension. I have doubts about the individual funds though, I've received paperwork and it looks like some aren't doing so well. Maybe I just leave it anyway. 

Regarding the ISA, there is just so much I've read about it being wise not to have actively managed funds due to the high fees and unlikeliness of 'beating the market', which is why I am considering selling. 

But you're right maybe I just leave it all where it is and if I want to try the All World Index passive investment I do it with money I will earn myself. But I'm worried that this way I'd be diluting potential cumulative gains.

Did your mum know more about stocks and funds than you do? She might have been investing for her own needs which will be different to your own but you won't be far wrong by hanging on.
If you're interested in the opinion of faceless idiots online post a list of all the funds and percentages in each in the ISA and the SIPP I'm sure they'll be opinions.
I agree though, an all world passive tracker will collect just under market return after fees and is easy and generally actively managed funds long term don't do better than that for a larger fee.

I think she did some digging around and asking on here haha but by no means an expert, and she told me she's sure I could do more thorough research and potentially move things around.

Yes I have been toying with that idea, maybe I will. Any opinion no matter how idiotic could be of use.

Do you think there could be a benefit to having two s&s ISAs, one for actively managed funds and one for a passive All World Index investment?

And, I was thinking an 80/20 equity/bond split, I read somewhere that the general rule for % in equities is 100 - your age, but someone commented that at my age it would be wiser to just go for 100% equities. Would you agree? I have some savings too so it is not like I'd be without cash, but it is not a ton. Although I am planning to earn, and earn well.

thunderroad88

justme8786 said:

kempiejon said:j

justme8786 said:

The SIPP I plan to transfer into my name and leave untouched for my pension. I have doubts about the individual funds though, I've received paperwork and it looks like some aren't doing so well. Maybe I just leave it anyway. 

Regarding the ISA, there is just so much I've read about it being wise not to have actively managed funds due to the high fees and unlikeliness of 'beating the market', which is why I am considering selling. 

But you're right maybe I just leave it all where it is and if I want to try the All World Index passive investment I do it with money I will earn myself. But I'm worried that this way I'd be diluting potential cumulative gains.

Did your mum know more about stocks and funds than you do? She might have been investing for her own needs which will be different to your own but you won't be far wrong by hanging on.
If you're interested in the opinion of faceless idiots online post a list of all the funds and percentages in each in the ISA and the SIPP I'm sure they'll be opinions.
I agree though, an all world passive tracker will collect just under market return after fees and is easy and generally actively managed funds long term don't do better than that for a larger fee.

I think she did some digging around and asking on here haha but by no means an expert, and she told me she's sure I could do more thorough research and potentially move things around.

Yes I have been toying with that idea, maybe I will. Any opinion no matter how idiotic could be of use.

Do you think there could be a benefit to having two s&s ISAs, one for actively managed funds and one for a passive All World Index investment?

And, I was thinking an 80/20 equity/bond split, I read somewhere that the general rule for % in equities is 100 - your age, but someone commented that at my age it would be wiser to just go for 100% equities. Would you agree? I have some savings too so it is not like I'd be without cash, but it is not a ton. Although I am planning to earn, and earn well.

It was I who suggested 100% equities. But let me clarify, I meant for you to only put what you wish to invest only into equities. You should always have an amount of easy accessible savings in a good, interest bearing high street account that can cover all your immediate expenses (anything you might need in the next year)

 Ideally I think you should also hold an amount of cash in a mixture of fixed interest vehicles like mmfs, gilts or fixed term high street deposit accounts, probably laddered from 1-5 years, so you aren’t tying up all your cash for too long.

 The remainder which is money you are pretty sure you won’t want for 5 years, what I’d call your investable cash, I’d put in a a global tracker. HSBC Ftse All World C is my personal favourite. You could just leave it at that for the utmost simplicity. My son who is only a few years older than you has done that, although he’s also added a slight tilt towards big tech by holding a bit in L&G Global Technology. He invests any spare cash monthly, 90% into HSBC and 10% L&G. He also has a LISA in which he holds only Royal London Short Term Fixed Income, but he is adamant he will be buying a property in the next few years, that may not be of any relevance to you. Good luck whatever path you take.

InvesterJones

justme8786 said:

Yes I have been toying with that idea, maybe I will. Any opinion no matter how idiotic could be of use.

Do you think there could be a benefit to having two s&s ISAs, one for actively managed funds and one for a passive All World Index investment?

And, I was thinking an 80/20 equity/bond split, I read somewhere that the general rule for % in equities is 100 - your age, but someone commented that at my age it would be wiser to just go for 100% equities. Would you agree? I have some savings too so it is not like I'd be without cash, but it is not a ton. Although I am planning to earn, and earn well.

As mentioned, it's very rare for actively managed funds (or self picks) to beat a passive global index over the long run, but people who have an interest in finance can't resist tinkering, so one remedy is to keep 90% of the value in a simple global index tracker and allow 10% for 'other' investments, such as an active fund. The point is to make sure you always keep 90% in the tracker and you don't touch it (other than to keep paying in).

Bond splits are usually to dampen volatility - in some circumstances when equities fall, bonds increase in value, so if you need to make a withdrawal before equities have recovered then the theory is the bond proportion will have increased so you don't make too much of a loss. It's all about withdrawal, so if you need to withdraw in under 10yrs then having some bonds in the mix may make sense. But if you're investing for 10+ years, less so. However it's also about your own risk tolerance - if you'll panic when you see a fall in value then you may have to give up some return in order to dial down the volatility.