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    • polkah
    • By polkah 8th Nov 19, 7:07 AM
    • 1Posts
    • 0Thanks
    Vanguard ISA. Advice on investment choices
    • #1
    • 8th Nov 19, 7:07 AM
    Vanguard ISA. Advice on investment choices 8th Nov 19 at 7:07 AM
    I am a total noob to investing and feel I am in a position to get something in place for the future.
    I'm 33, mortgage will be cleared in the next 18months, no other debt. Paying into a workbased pension, I put in 8% work puts in 12%.
    Opened a vanguard isa and putting in 100 a month into Vuke ftse 100 and was going to put the same into VWRL ftse all world with no intention to dip into this or pay much attention to them for 15+ years. Once the mortgage is cleared in 18months then the monthly payments would increase.
    My question is, is this a good enough plan, I am a total beginner here and I'm not sure if I should also (or instead of one of these) be looking at the LifeStrategy 80 or similar? Or if there are better investment options I should look into.
    Any advice any one could share is appreciated!
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    • Alistair31
    • By Alistair31 8th Nov 19, 7:57 AM
    • 211 Posts
    • 215 Thanks
    • #2
    • 8th Nov 19, 7:57 AM
    • #2
    • 8th Nov 19, 7:57 AM
    I guess you intend to access the investments before SIPP access age ? Hence favouring ISA investments over SIPP, and foregoing the immediate tax benefit.
    Also, what is your thinking behind FTsE 100 in addition to VWRL ?
    • bowlhead99
    • By bowlhead99 8th Nov 19, 8:25 AM
    • 9,561 Posts
    • 17,424 Thanks
    • #3
    • 8th Nov 19, 8:25 AM
    • #3
    • 8th Nov 19, 8:25 AM
    Lifestrategy is a range of decent funds holding a mix of global assets (company shares and bonds issued by companies and governments all over the world)

    By contrast, the FTSE 100 fund you mention is a specialist fund which only puts its money into shares of the biggest 100 companies that happen to be listed on the UK stock exchange, weighting its allocations to the most valuable ones so that a large proportion of the money is in just a few companies in a few industries (eg oil & gas, banks and big pharma) ; many types of company aren't represented at all because they they don't choose to list in London. It would make money for you over the long term but to hold it as your only investment would be poor quality investing. It's a specialist fund designed to be held alongside a whole bunch of other funds.

    The FTSE All world is a much broader index with 95% of its holdings being shares listed on foreign stock exchanges. Like the FTSE100 fund it only holds company shares (equities), and not bonds or other assets. It's largest drop in value in the last 12-13 years was in a period of about 18 months ending March 2009, where including the effect of reinvesting dividends received it fell 58% from peak to trough (when measured in USD).

    Presuming you don't really want to invest in a not-very-diversified, single-stockmarket index when other options exist, you should dump the FTSE100 tracker. And presuming you don't want such a wild ride as you would get with a 100% equity fund that has 95% of its investments on overseas stock markets, you should probably not think of that as your ideal fund either.

    Of the choices Vanguard offer, the Lifestrategy ones are the ones that would make sense for you to be putting your money in inside your ISA on a 15+ year view. Whether you prefer the 80% equity one or the 60 or 40 will depend on your appetite for risk of course.

    80% equity will give a similar result to full equity and be too volatile for some. If you are only drip feeding over 15 years, a lot of the money will have been invested for a lot less than 15 years on average, when you eventually come to look at it. And some people would look at it monthly and be worried if it spends a couple of years going down in price most months, and might panic into selling. Others would be completely fine and just have it on direct debit as they don't need the money any time soon and don't care about price drops (because the price drops help that month's money buy more cheap shares).
    Last edited by bowlhead99; 08-11-2019 at 8:31 AM.
    • JohnWinder
    • By JohnWinder 8th Nov 19, 8:30 AM
    • 65 Posts
    • 44 Thanks
    • #4
    • 8th Nov 19, 8:30 AM
    • #4
    • 8th Nov 19, 8:30 AM
    There’s little tax law in Hale’s book Smarter Investing, but you’d likely get a lot out of it.
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