Inheritance 100k - What would you do in my situation?

tacpot12

Ibblackberry said:

tacpot12 said:

For a first time investor with no experience of investing, I would suggest that you invested £10,000 in each of the two funds, and then research them (do a bit of research each year) until you figure out what you have bought :  

HSBC Global Strategy Balanced Acc 

Vanguard LifeStrategy Balanced Acc

You should watch their performance every three or four months, just to get an idea of how their value changes over time. Don't worry if they go down in value immediately after you  have bought them! They have 12-15 years to perform, and historically shares and bonds have always done well over the long term. 

Horrific advice.  

Invest in something you don't understand, then look into it after???!???

And yet that is the reality for 99% of investors!!! Most people become investors because they are autoenrolled into a pension scheme (as I was in 1991), so they are invested in something that they know nothing about and don't have the tools, skills and understanding to evaulate what is best for them. 

 It took me about 10 years of watching my pension and reading up on it to start to have the confidence to start to adjust the asset allocation. The OP doesn't have this time. They need some thing that is safe and reliable with low charges, and that they can invest in immediately. 

I agree there is little difference between the two funds I suggested. Pointing this out is useful to the OP because I didn't do so, but the reason why suggesting two funds is useful is exactly because they are similar - they are easy to compare. Try comparing a Vanguard LifeStrategy Fund against the IUKD ETF that I own quite a stack of. They are very different beasts. A new investor is lilkely to spend far too long trying to understand the world of investing, whereas what they should be doing, IMHO, is jumping in with both feet first and learn by doing. They just need some guard rails, and the two funds I proposed provide these. 
 

InvesterJones

tacpot12 said:

I agree there is little difference between the two funds I suggested. Pointing this out is useful to the OP because I didn't do so, but the reason why suggesting two funds is useful is exactly because they are similar - they are easy to compare. Try comparing a Vanguard LifeStrategy Fund against the IUKD ETF that I own quite a stack of. They are very different beasts. A new investor is lilkely to spend far too long trying to understand the world of investing, whereas what they should be doing, IMHO, is jumping in with both feet first and learn by doing. They just need some guard rails, and the two funds I proposed provide these. 
 

Again, if serious, I think this is a poor recommendation. To what purpose are you comparing two very similar funds? What output are you looking for and what would you do with the information? Say one fund slightly outperforms the other in the past.. that doesn't mean it will do in the future - and there's no need to jump in to look at past performance, it's readily available without any investment.

IanManc

tacpot12 said:

For a first time investor with no experience of investing, I would suggest that you invested £10,000 in each of the two funds, and then research them (do a bit of research each year) until you figure out what you have bought :  

HSBC Global Strategy Balanced Acc 

Vanguard LifeStrategy Balanced Acc

You should watch their performance every three or four months, just to get an idea of how their value changes over time. Don't worry if they go down in value immediately after you  have bought them! They have 12-15 years to perform, and historically shares and bonds have always done well over the long term. 

The Vanguard fund you recommend doesn't exist. 

So you give poor advice, recommend a product that doesn't exist, and when challenged with an explanation why your advice is so bad you come back and insist you're correct.

Are you Donald Trump?

Middle_of_the_Road

Is this close enough?
LifeStrategy® 80% Equity Fund

https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-80-equity-fund-accumulation-shares/overview

Albermarle

No pension (except state pension, I hope!

OP - What do you meant by 'I hope'?
Hopefully you have checked.

Check your State Pension forecast - GOV.UK

IanManc

Middle_of_the_Road said:

Is this close enough?
LifeStrategy® 80% Equity Fund

https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-80-equity-fund-accumulation-shares/overview

The 20%, 40%, 60% and 100% Lifestategy funds are also described as "balanced" in the same place on their respective pages, so who knows?

Linton

Why and how are people picking investments when no-one knows what the OP wants from their inheritance, both amounts and timeframes?

InvesterJones

Linton said:

Why and how are people picking investments when no-one knows what the OP wants from their inheritance, both amounts and timeframes?

It's only one person to be fair, and I don't think they're being serious.

tacpot12

I meant the LifeStrategy 60% Equity fund and have been back to my original post and corrected this. Thanks for point out my omission.

tacpot12

InvesterJones said:

Linton said:

Why and how are people picking investments when no-one knows what the OP wants from their inheritance, both amounts and timeframes?

It's only one person to be fair, and I don't think they're being serious.

The OP stated that they wanted to make their inheritance last as long as possible. While this is a fine sentiment, they are heavily constrained by their financial circumstances. This inheritance will end their UC claim, and so they will have to cover their rent and all their essential outgoings using it, and do so until the capital is exhausted.

Their principle need is a steady cash inflow to replace the lost UC. This could be acheived with an annuity, but that's another complex area. Keeping the money in cash is easier to understand (so they are more likely to choose this options) but havign all the money in cash is sub-optimal if the aim is to make it last as long as possible. The OP has 17 years to go to reach her state pension age, so has plenty of time for a stockmarket investment to make a good return, but with additional risk. 

Other will say we know nothing about the OP's risk appetite, but in reality a novice investor that has been living on a low income is going to have a low risk appetite, at best. I recommended funds that are 'medium' risk according to the industry because, in reality, these are really quite low risk funds (they are domiciled in the UK, are very large and are well managed). I honestly think they represent a good choice for someone who wants to do something about investing a small portion of their inheritance (i suggested 20% should go into these funds and the other 80% to be held as cash).  Telling a novice investor they shouldn't invest until they understand what they are buying might be the best advice, but my experience suggests that such people won't spend the time learning everything they need to make an informed decision. Making an uninformed decision isn't the worst thing you can do. As I said, 99% of employees that are enrolled in a private pension scheme don't take the time to learn about what they are invested in. It took me 10 years or more to figure it out, but because I didn't opt out of the pension, I was able to retire at 53. I want others to have the same financial success that I did but that can't happen if you insist that you have to make an informed choice when that many years. I stand by my advice that it is better to learn by doing than miss out because it's difficult.