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Funds investment advice

edited 30 November -1 at 1:00AM in Savings & Investments
25 replies 3.6K views
lionel_hutzlionel_hutz Forumite
41 posts
edited 30 November -1 at 1:00AM in Savings & Investments
Since paying off my mortgage I have been putting the money I would have used for that into an ISA. I have saved up 25K but it isn’t really doing anything for me and I don’t expect to need it so I’ve been researching funds (with some help from on here).
I am looking at long term, approx 10 years minimum and I am happy to take a risk.
Your opinions on what I’m going to do would be appreciated....
Invest 15-20K equally into two funds transferring the current ISA, Baillie Gifford global discovery AND Legal & General global 100 fund (one aimed at smaller companies, one aimed at larger companies).
I was also going to invest £500 each month using this years ISA into something more lower risk such as HSBC European index or Vanguards FTSE 250 fund.
Keep the remaining 10K in the ISA for emergencies.
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Replies

  • AnotherJoeAnotherJoe Forumite
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    Since paying off my mortgage I have been putting the money I would have used for that into an ISA. I have saved up 25K but it isn’t really doing anything for me and I don’t expect to need it so I’ve been researching funds (with some help from on here).
    I am looking at long term, approx 10 years minimum and I am happy to take a risk.
    Your opinions on what I’m going to do would be appreciated....
    Invest 15-20K equally into two funds transferring the current ISA, Baillie Gifford global discovery AND Legal & General global 100 fund (one aimed at smaller companies, one aimed at larger companies).
    I was also going to invest £500 each month using this years ISA into something more lower risk such as HSBC European index or Vanguards FTSE 250 fund.
    Keep the remaining 10K in the ISA for emergencies.

    I'd say the latter two would be higher risk not lower.
    Offhand, wouldn't the effect of picking top 100 and very small companies just be the same as picking the middle ground of a global fund that covered the top 5k or so ? Test that anyway, look at prices of all three over say ten years and see what it looks like.
    It also seems a bit contrived to me, there's nothing magic about 100, it's only there because it's a neat round number. So why pick that?
  • DrSynDrSyn Forumite
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    1. I suggest watching the following:

    http://www.kroijer.com/

    https://www.ifa.com/indexfundsthemovie/


    2. Have you considered using a Multi-Asset Fund?

    Multi-Asset Funds

    Vantage Life Strategy
    HSBC Global Strategy
    L&G Multi Index Funds
    Blackrock Consensus
    Architas Passive

    These have wide diversification while minimising risk, at low cost.
  • Alz1986Alz1986 Forumite
    119 posts
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    You really dont want to start getting involved with volatile funds which appear to have done 100% return in 3 years - the short term plunges and volatility will wear you down.


    You need to see growth, even if its slow. Otherwise



    HSBC American index tracks the S&P500 or Vanguards SRI Global Stock is a good one too. I made mistakes by choosing funds which plunged during the bad times and rised during the good times - you make errors in between buying and selling.
  • Alz1986 wrote: »
    You really dont want to start getting involved with volatile funds which appear to have done 100% return in 3 years - the short term plunges and volatility will wear you down.


    You need to see growth, even if it’s slow .

    Are you saying if a fund has grown a lot over 3 years then it’s probably not going to see much growth, if any over the next few years?
    I do want to invest in something with a bit more risk though.
    Also the baillie Gifford fund was very well rated.
  • OldBillOldBill Forumite
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    DrSyn's advice should be taken.

    Those short Lars Kroijer videos are worth their weight in gold.

    Even I understood them.
  • PrismPrism Forumite
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    Not that it won't grow as fast. It may or may not. I quite like the Baillie Gifford approach but it's pretty volatile
  • Alz1986Alz1986 Forumite
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    As others have said, you may or may not. Having invested into several Baillie Gifford funds, their plunges and volatility is frustrating to new investors, I too said I dont mind volatility, to my credit, I am still invested, despite the funds not recovering yet. The psychology behind it all is that new investors need a good first impression, not a disastrous one.
  • DrSyn wrote: »
    1. I suggest watching the following:

    http://www.kroijer.com/

    https://www.ifa.com/indexfundsthemovie/


    2. Have you considered using a Multi-Asset Fund?

    Multi-Asset Funds

    Vantage Life Strategy
    HSBC Global Strategy
    L&G Multi Index Funds
    Blackrock Consensus
    Architas Passive

    These have wide diversification while minimising risk, at low cost.

    Those videos where very useful, to the point where I think I’ll downgrade the risk I was prepared to take and go for a global indexed fund. Considering vanguards FTSE global index fund as
    charges seem decent at 0.24% alongside a decent return.
  • piorunspioruns Forumite
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    You couldn't have made a better decision at this point. I've done the same few months ago. Ditched actively managed funds and went ahead with FTSE All-World index fund. Now I can sleep relaxed knowing, that realistically speaking I couldn't have done it any better.
    Debt & mortgage free since 2011  |  Financial independence since 2017
  • edited 27 May 2019 at 1:36AM
    bowlhead99bowlhead99 Forumite
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    edited 27 May 2019 at 1:36AM
    I think I’ll downgrade the risk I was prepared to take and go for a global indexed fund. Considering vanguards FTSE global index fund as
    charges seem decent at 0.24% alongside a decent return.
    pioruns wrote: »
    You couldn't have made a better decision at this point. I've done the same few months ago. Ditched actively managed funds and went ahead with FTSE All-World index fund. Now I can sleep relaxed knowing, that realistically speaking I couldn't have done it any better.
    The largest peak-to-trough drawdown (on a total return basis, in USD) for the FTSE All-World index in the last 12 years was 57.9%, between autumn 2007 and March 2009. During that crash, known as the 'global financial crisis' or 'credit crunch', $100 in the fund fell to $42.10 (including the value of dividends received and reinvested along the way) before it started to recover and go back up.

    This may be the sort of fund which helps you sleep relaxed - if, like the OP mentioned in his first post, you are 'happy to take a risk'.

    To the OP who is thinking of downgrading the risk he was going to take from using a single-region specialist fund like a European Index or a UK mid 250 index fund - it's true that using a global fund is better investing than in a single regional area. But clearly if the fund is 100% equities, and 94% of those equities are listed in foreign countries, it's still going to be pretty high risk, and 10 years is not necessarily long enough to get 'long term average' results; it could be a good decade or a bad one or a middling one.

    The decent return of the last 10 years (since the absolute market bottom of the crash which started to recover in March 2009) should not really be expected to be repeated for the next 10 years, not least because we are not starting from the absolute bottom of a crash, but rather from close to the peak.
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