Nutmeg, Vanguard Lifestrategy or Ready-Made Portfolio?

Hi all

Complete newbie to investing here and was very much hoping for some of your expert advice.

I have always been a bit nervous of the stock market but have always used my full Cash ISA allowance. I'm feeling a bit braver now and would like to put this year's ISA allowance of £15,240 into a Fund in a Stocks and Shares ISA. I already have the money in savings so am ready to transfer. Before I do, a few questions:

1. I am clueless and don't have the time or understanding to research and choose between individual funds. I have been looking at Nutmeg who seem to do all the work for you (great for me) but on the forums people seem to say that you can do better than Nutmeg for a lower fee and better returns. One of the suggestions that comes up a lot is the Vanguard Lifestrategy range (I'd probably go 40 or 60), but that means buying an individual fund rather than a portfolio and I wasn't sure if it's better to diversify. Then there are the Ready-made fund portfolios offered by BestInvest or HL or whoever, which are more expensive than Vanguard but a little cheaper than Nutmeg but not actively managed which I think would mean that every so often I would need to sit down and assess and make decisions about whether or not to move my money which I'm not qualified to do!

So the question is, for a complete clueless person who wants to pretty much just put the money somewhere and leave it and have it do better than it would in Savings/Cash ISA, what would be the best option?

2. Once a decision has been made, is it better to then buy the thing in one big go (to maximise the use of the money that is currently sitting in savings) or drip feed to avoid buying when the market is high?

Thank you so much for your time.
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Comments

  • InvestInPoker
    InvestInPoker Posts: 1,356 Forumite
    lucyonline wrote: »
    So the question is, for a complete clueless person who wants to pretty much just put the money somewhere and leave it and have it do better than it would in Savings/Cash ISA, what would be the best option?


    I am not qualified to advise you what would be the best for you but I can say that in my opinion vanguards lifestrategy range sounds good for your situation. They are premade ready to go portfolios you access via one fund. They hold a range of vanguard funds inside them to make up the equities/bonds exposure that you choose. The equities are globally diversified albeit without some things you might want to add on the side like smaller companies, property, more in emerging markets etc. Can I ask how long you would be looking to leave this money in the stock market for? If you are going to invest in this stuff you should ideally not be needing this money at all any time in the near future. Can you tell us what your risk tolerance would be? Being honest would you be able to stomach a 20% drop in your money without getting upset? How about seeing your fund holding half in value?

    2. Once a decision has been made, is it better to then buy the thing in one big go (to maximise the use of the money that is currently sitting in savings) or drip feed to avoid buying when the market is high?
    It is a risk reward thing. Decide on your risk tolerance and time frame above first then consider this. The argument against drip feeding would be the more time your money is in the market the more money it (should) be worth at the end so on average you would be better off just dumping it all in as a lump sum. However this significantly increases the volatility you will encounter as like you say you could get unlucky and put it all in on day 1 just to see massive drops happen on day 2. Drip feeding would avoid that.


    The other thing to consider is what fund platform you will be using for your purchase. Some charge fixed fees, some charge a small % of your total holding etc. Some have great customer service, are easy to deal with and have fast dealing with good websites. Others are spartan with less emphasis on customer service. Have a look here http://www.comparefundplatforms.com/ and ask about ones you consider on this forum.
  • lucyonline
    lucyonline Posts: 23 Forumite
    Thanks InvestinPoker. To answer your questions, I'm looking at this as a medium-to-long term thing, it might even end up being my pension but equally if I need the money for a big purchase (I'm thinking house renovation or round-the-world trip) I might remove it sooner. I'm 36. I would like to see it grow significantly better than it would in savings or cash but I'm pretty cautious generally in life so I wouldn't like to see it go down if that can be avoided! I had an investment fund once before, but after 9/11 it tanked and never really recovered. In that case I would have been better off leaving the money in savings. Don't really want that to happen again though I know there's always a risk.
  • InvestInPoker
    InvestInPoker Posts: 1,356 Forumite
    lucyonline wrote: »
    I'm looking at this as a medium-to-long term thing, it might even end up being my pension but equally if I need the money for a big purchase (I'm thinking house renovation or round-the-world trip) I might remove it sooner. I'm 36. I would like to see it grow significantly better than it would in savings or cash but I'm pretty cautious generally in life so I wouldn't like to see it go down if that can be avoided!

    Got you, well if you want "significantly better" returns than savings accounts (or the current accounts promoted here which give some quite good rates of interest risk free) then you will have to take on some level of risk. It is only with the risk that you can get the reward of "significant" returns above inflation over the long term which you seek. However you can choose a level of risk that suits you, and you probably want to look into the lower level of equities variants (40 or 60) of the lifestrategy funds. Perhaps put the money for the expensive holiday/work on the house into high return current accounts and put some more locked away for the long term into one of the VLS versions. You wont be able to avoid seeing it go down at some point unless you just don't look for 25 years, its never a straight line up with investing.
  • BLB53
    BLB53 Posts: 1,583 Forumite
    So the question is, for a complete clueless person who wants to pretty much just put the money somewhere and leave it and have it do better than it would in Savings/Cash ISA, what would be the best option?
    The Vanguard LS is a sort of fund of funds - it holds a diverse blend of the Vanguard stand alone funds all in one wrapper.

    I believe it is a great choice - I hold it in my own portfolio - low cost, balanced, globally diversified and auto rebalance.

    Cheapest broker would possibly be Charles Stanley direct 0.25% p.a. so £38 charges for your first year.

    Equities offer the better chance of higher return over the longer periods so maybe LS60 or you can always get one of each - LS60 and LS40 to produce 50:50 balance between equities and bonds.

    Good luck with it!
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,445
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    I am a novice investor and have just gone for the Vanguard LS60 as like you I do not feel qualified to make investment decisions. I have recently taken the plunge and made the decision to not only invest the £1k per month in this tax year into a Stocks and shares isa (only investing in the Vanguard LS60) but have also just transferred my large cash isa with around £36k into the same fund. That way I do not have to worry about whether it is balanced or not.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • coyrls
    coyrls Posts: 2,423
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    In my opinion, given your positon and the choice of:

    1) Nutmeg
    2) Vanguard LS
    3) A "ready made" portfolio that you would need to rebalance

    I would go for 2, in a low cost S&S ISA Wrapper. Which is low cost for you will depend on the sums involved. Check out the spreadsheet that you can download from the Langcat blog here: http://langcatfinancial.co.uk/recent-purrings/
  • System
    System Posts: 178,077
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    Legal and general multi index funds are another option, similar to vanguard life strategy funds but the fund managers have a semi active role and decide overall spread of assets. However it is made up of trackers and still has low charges.
  • BLB53
    BLB53 Posts: 1,583 Forumite
    fund managers have a semi active role and decide overall spread of assets
    Arguably, this could be a reason to avoid - fund managers do not have a great track record of making consistently good calls...
  • rinnin
    rinnin Posts: 14
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    Apologies if this is a silly question but I've had a look at Nutmeg site and I cant find a list of funds such as the Vanguard LS. So is Nutmeg not a particularly good platform (despite its flashy website) if you want to specify your own funds?

    (Also got burned years ago putting my savings into telecoms and banking shares tanking and realise the future isn't looking particularly good for me with everything in cash. Planning to setup & drip feet into a S&S ISA due to the crazy market highs at the moment and uncertainty re: Trump & Brexit )

    Thanks in advance
  • dunstonh
    dunstonh Posts: 116,033
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    Apologies if this is a silly question but I've had a look at Nutmeg site and I cant find a list of funds such as the Vanguard LS.

    You wont. Nutmeg is not an investment platform.
    So is Nutmeg not a particularly good platform (despite its flashy website) if you want to specify your own funds?

    As it is not a platform and does not claim to be a platform, then it is not unsurprising that it is not a very good platform!
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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