Investing in uncertain times and diversifying

london21

Good idea checked

Vanguard Lifestrategy 60 

Risk score 4 compared to global index risk score 5 although lower returns.

In the short term dont have much change planned other than not currently working but I have final stage interview coming and have 50k in premium bonds i can easily access.

Not pleased with myself that i sold but learnt my lesson and need to be careful who I am listening to and not be so reactive.

Thanks.

chiang_mai

https://forums.moneysavingexpert.com/discussion/comment/81955495#Comment_81955495

When you say risk score 4, presumably you mean KIID risk level 4, if so, that's only one very high level way to look at individual fund risk. There are several others, just as there are different organisations internationally that attempt to measure and quantify risk, many of which don't agree.

The Morningstar (MS) web site is generally considered to provide the most complete reliable and up to date view of investment funds at a detail level. MS rates that fund as Moderate Risk, bordering on Adventurous, and is above average for its category, presumably because of its Beta and capture ratios. Companies such as Trustnet have different rating systems yet again and often the underlying methodolgies of all of them are dis-similar.

https://global.morningstar.com/en-gb/investments/funds/0P0000TKZK/risk

Standard Deviation is a method of measuring a funds volatility which is important to understand. Beta on the other hand measures fund risk as compared to a funds benchmark. And then of course there is geographic risk, which is the risk associated with the market in which you're invested. Then we have sector risk and the risk of over or under concentration, as in the case of the US Tech sector currently. Next comes capitalisation risk, this is the size of companies that you invest in, Large, Medium and Small, each of which carries its own risk. The point here is that solely looking at the KIID Risk Level provides a very narrow and limited view of the true risk of owning a fund, which is why I suggested earlier that you seek professional assitance with your choices. KIID's are a reasoanble standardised first glance view of fund risk but the KIID Risk Level alone is not sufficent basis on which to make investment decsions, not by a long shot……I think.

age 76 lives outside UK

Aminatidi

https://forums.moneysavingexpert.com/discussion/comment/81955495#Comment_81955495

Something I did was spend £30 on a Finametrica risk questionnaire.

They're very similar to the sort of thing an advisor would have you fill in as part of determining your appetite for risk.

Money well spent IMO.

Aylesbury_Duck

https://forums.moneysavingexpert.com/discussion/comment/81955495#Comment_81955495

Lower returns historically. That may not be repeated, of course. The longer the investment horizon the more likely it will be, probably, but there are no guarantees.

Georgemc

https://forums.moneysavingexpert.com/discussion/comment/81954739#Comment_81954739

Please don't invest with St James Place! I had a pension with them for 7 years before seeing the light. I was curious how the money I'd paid in would have performed if I'd contributed the same to various index funds, so i built an app to do just that, and was horrified at the result.

I recently transferred it to another provider, threw it in a SIPP and am happy not to be paying their huge fees any more. Even if you don't self-invest, don't use SJP.

london21

https://forums.moneysavingexpert.com/discussion/comment/81960796#Comment_81960796

Thanks, Not at all

 St James Place seem to charge a lot of fees for managed service but prefer passive index funds not active.

It is a high opener, one has to be careful listening to people, it was afterwards i checked FCA and realised he was not a FA.

chiang_mai

https://forums.moneysavingexpert.com/discussion/comment/81960851#Comment_81960851

Member @Bostonerimus1 is a big fan of the three paasive fund approach from Vanguard and has had good success with it. It strikes me from reading your posts that it's an approach that might suit you. Here's two links that describes the three fund approach:

https://www.bogleheads.org/wiki/Investing_from_the_UK

https://www.bogleheads.org/forum/viewtopic.php?t=446231

The beauty of the approach is that it doesn't require much up front learning and is pretty much maintenance free. Once set up you have a well diversified portfolio from one of the biggest names in the business. It is unlikely to produce stellar returns or shoot the lights out but it will produce consistent returns over time that mathematically are not easy to beat, YoY.

london21

I bought back the Vanguard FTSE Global All Cap Index Fund on the 9th April.

Up £10k

Leaving it and will be more careful next time.

Diaz09

With £300k and potential business plans on the horizon, you're actually in a brilliant position to take advantage of market volatility rather than fear it! Since you're considering starting a business, why not keep maybe 6-12 months of expenses plus your business startup costs in cash, then drip-feed the rest back into your usual index funds over the next few months? This way you're not timing the market but you're also not missing out on potential recovery gains while you figure out your next move.

london21

This was what the person was saying 😂 but it is what it is.

https://www.bbc.co.uk/news/articles/c75kp1y43lgo