Started my first Stocks and Shares ISA.

DogTailRed2

59 year old Brit finally decided to setup my first Stocks and Shares ISA (about time some would say) and well done for the UK Government giving me a nudge by dropping the Savings ISA Cap.

After research I decided to play it safe and long term (10 years) buy buying a well known global index fund tracking all the usual assets and where dividends are reinvested automatically.

As a low risk investor is this the best approach for a reasonable return (turn 10k into 25k+) after 10 years? Some individual stocks are tempting but research shows you are most likely to boom or bust with these.

Interested in peoples opinions and fully aware even safe funds can go down.

wmb194

https://forums.moneysavingexpert.com/discussion/6681259/started-my-first-stocks-and-shares-isa

You have a risk mismatch if you think you're a low risk investor but that 10% pa in a 100% equities fund is a reasonable return. 100% equities is always at the higher end of the risk spectrum and 10% pa is a high expectation.

I'd expect most people who consider themselves low(er) risk but want to put a toe into equities would look at 60/40 equity/bond funds. Then again it depends on the composition of the rest of your portfolio e.g., £20k in a 100% equities fund and £80k in savings accounts would balance things out risk-wise.

Albermarle

You are right to avoid individual stocks as they can be very volatile.

However being a 'low risk investor' not sure why you have picked a relatively high risk investment.

It will hopefully increase OK over the next 10 years but it could be quite a bumpy ride- are you prepared for a big drop in a short space of time ?

(turn 10k into 25k+) after 10 years?

This is very overoptimistic.

I see from previous threads that you have various DC pensions- how are they invested?

El_Torro

If you want to be globally diversified and you want something that is lower risk than 100% equities then look up multi asset funds. This is essentially a global tracker but with bonds added to smooth out the volatility. There will still be volatility, just not as much as a global tracker. The main thing you will need to decide is what percentage of bonds to have in the fund.

Global trackers and multi asset funds also have most of their shares investments in the US. Some people will say this is fine because you might as well go with the gobal weighting. Others will say it's not fine because the US is currently in a massive AI bubble which will burst at some point. As for which of those views is right and which is wrong: only time will tell.

adindaspantai

https://forums.moneysavingexpert.com/discussion/6681259/started-my-first-stocks-and-shares-isa

To turn £10k into £25k in ten years, you will need a compounded return of around 9.6%. It is a very optimistic assumption if it is to be achieved with a very low risk investment.

Even with a highly diversified equity funds such as VALL, VAFTGAAG the risk level is still 6 out of 7.

eskbanker

https://forums.moneysavingexpert.com/discussion/6681259/started-my-first-stocks-and-shares-isa

Not completely convinced that you've grasped the fundamentals of investing if you believe that any equity-based investments can be described as 'safe', what do you understand by that term?

dunstonh

59 year old Brit finally decided to setup my first Stocks and Shares ISA (about time some would say) and well done for the UK Government giving me a nudge by dropping the Savings ISA Cap.

Have you considered the pension wrapper? For most people, the pension wrapper is more tax-efficient than the ISA wrapper.

After research I decided to play it safe and long term (10 years) buy buying a well known global index fund tracking all the usual assets and where dividends are reinvested automatically.

Ten years is medium term, not long term.

As someone new to investing, being well known to you could actually be a hindrance rather than a benefit. Many of the best funds are from financial companies that are not as well known outside of financial services. Experienced investors would know them well, but inexperienced probably not.

As a low risk investor is this the best approach for a reasonable return (turn 10k into 25k+) after 10 years? Some individual stocks are tempting but research shows you are most likely to boom or bust with these.

You need to define what your definition of low risk is, because the investment you've chosen is high risk. Especially with a relatively short timescale of ten years

Interested in peoples opinions and fully aware even safe funds can go down.

It certainly isn't defined as safe. It's not gung-ho either. However, it would be risk 10 on a 1-to-10 scale of conventional investing. If you included niche options, it would be nine out of ten for investment risk

For context of the level of risk you are taking. You could suffer a 50% loss in a 12-month period. Losses over ten years are rare, but they do happen. The most recent between 2000 and 2009.

masonic

There is nothing wrong with the choice that you have made, but you need to be realistic about the risk and return expectations.

A fair expectation for the long term return of a global index fund is around inflation+4%. That's a lot better than the expectation for cash, which sits around the level of inflation. But even over 10 years, there is a small risk a global index fund could perform worse than cash, or even be worth a little less than you put in if you are very unlucky. Also, along the way you will probably see multiple drawdowns of 10-20% and you might see a more extreme 30-50% drawdown if you are unlucky. But good years can be +20-30% and there will typically be more of those.

That all might be fine if you have plenty of other safe assets and income, but if you need a smoother ride, then as suggested by others, multi-asset funds give you that, albeit with lower returns.

amcc1

You could consider adding £60 deposit per month to your initial £10,000. Then you would reach your £25,000 target after 10 years on a 5% average return. You would also be buying ‘cheaper’ units in any periods of downturn. Makes it all a bit more interesting and useful for learning. See https://interestmagician.com for quick calcs.