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  • FIRST POST
    • oz0707
    • By oz0707 2nd Jan 18, 4:11 PM
    • 538Posts
    • 147Thanks
    oz0707
    Funds for idiots
    • #1
    • 2nd Jan 18, 4:11 PM
    Funds for idiots 2nd Jan 18 at 4:11 PM
    Excuse the title. I'm looking for advice on funds I should be investing in. I have a modest sum split across a few banks (FSCS limit) and i'm steadily realising inflation is eroding this. I do occasionally need a lot of working capital for my business but i'm thinking the least I could do is max out every years ISA allowance into one of these tracker or index funds. Wasn't it a lot easier before BOE rate fell and you could just about starve inflation off with a steady savings account!

    So i've had a quick look at Vanguards website. Sort of understand whats going on with the different funds but will I have to open up a new ISA with them? If so will i still be allowed to keep my existing S&S Isa with halifax? I only use this for a bit of 'gambling' on the odd individual share here and there.

    As for risk I appreciate this is an individual decision subject to specific outlook/lifestyle/goals. Im around 30 and as I said am happy to put away 15k (still the ISA limit?) a year into one of these funds and (sort of) forget about it. In the unlikely event I need to sell up everything to release money for myself i'll just have to deal with the consequences - down cycle etc.

    So apart from Vanguard, what are the places/funds you lot are using to invest. I want something passive, quite a global outlook, minimal fees and ideally ISA wrapper. Does this mean i'm more suited to a index tracker? Sorry for the amateur questions I bet you're answering this once a week.
Page 1
    • oz0707
    • By oz0707 2nd Jan 18, 4:24 PM
    • 538 Posts
    • 147 Thanks
    oz0707
    • #2
    • 2nd Jan 18, 4:24 PM
    • #2
    • 2nd Jan 18, 4:24 PM
    I have since done a bit more research this afternoon! I see I can purchase these funds through my halifax S&S ISA. So i suppose the answer to my first question is I can keep and hold within my Halifax ISA. Just whether this is the most cost effective platform. 12.50 a trade and a small annual fee I think. Doesn't seem too bad to me, perhaps there are better out there?
    • DennisTenus
    • By DennisTenus 2nd Jan 18, 4:25 PM
    • 158 Posts
    • 14 Thanks
    DennisTenus
    • #3
    • 2nd Jan 18, 4:25 PM
    • #3
    • 2nd Jan 18, 4:25 PM
    ISA limit is 20K and for next tax year it's the same i believe.

    I prefer to use a platform like IWeb for example who are cheap and then invest in Vanguard and other funds from there instead of moving to Vanguard itself and only be able to invest in their funds.

    Just my thoughts.
    • Eco Miser
    • By Eco Miser 2nd Jan 18, 4:49 PM
    • 3,444 Posts
    • 3,234 Thanks
    Eco Miser
    • #4
    • 2nd Jan 18, 4:49 PM
    • #4
    • 2nd Jan 18, 4:49 PM
    Monevator has both a table and a tool to compare brokers (platforms). SnowMan's spreadsheet can be customised to your exact needs.

    You can subscribe new money to just one S&S ISA each tax year, but you can leave your old ISA open, and continue to buy and sell within it including re-investing dividends (but adding no more), or transfer it to a new provider, not necessarily the same provider you use for new money.
    Eco Miser
    Saving money for well over half a century
    • oz0707
    • By oz0707 2nd Jan 18, 4:50 PM
    • 538 Posts
    • 147 Thanks
    oz0707
    • #5
    • 2nd Jan 18, 4:50 PM
    • #5
    • 2nd Jan 18, 4:50 PM
    I would prefer to stick with my at present platform and invest in the funds that way too. Halifax may not be the cheapest but i'd have to check out the cost v effort of changing. If i'm going to save 10 quid a year i'll stick with what i've got. If its approaching 50 quid a year it's worth my time moving. Also it lets me continue to have a small flutter on individual shares without having to remember yet another password, favourite meal, most memorable date, first girlfriends favourite knickers and so on!

    Yes just seen ISA limit increasing. All of a sudden might not be maxing out ISA limit each year, quite a commitment!
    • DennisTenus
    • By DennisTenus 2nd Jan 18, 4:58 PM
    • 158 Posts
    • 14 Thanks
    DennisTenus
    • #6
    • 2nd Jan 18, 4:58 PM
    • #6
    • 2nd Jan 18, 4:58 PM
    A Password Manager can help you with that, it can sync across all devices and makes life so much easier. I have over 300 accounts setup in mine. Yes it could be hacked but anything can be so for things that are really sensitive like banking/finance i miss the odd character out so in the VERY unlikely event of someone hacking it they still wouldn't be able to get straight in.
    • soti84
    • By soti84 2nd Jan 18, 4:59 PM
    • 6 Posts
    • 1 Thanks
    soti84
    • #7
    • 2nd Jan 18, 4:59 PM
    • #7
    • 2nd Jan 18, 4:59 PM
    HL do not have charges to buy or sell funds.
    Their platform fee is 0.45% and as you may well be aware, every fund has an ongoing charge which has to also be factored in. It's worth noting that they have discounts on most of the funds which, on certain occasions, produces a reasonable net ongoing charge.
    I would need to check out the suggestion from Eco Miser and figure out if there's another platform that would suit me better.

    Kind Regards,
    Soti84
    • oz0707
    • By oz0707 2nd Jan 18, 5:03 PM
    • 538 Posts
    • 147 Thanks
    oz0707
    • #8
    • 2nd Jan 18, 5:03 PM
    • #8
    • 2nd Jan 18, 5:03 PM
    Reading this bogleheads wiki. Suddenly I understand I have two goals here which seem to be seperate.
    Invest for my future (say retirement?)

    Protect a modest sum from inflation, at a very low risk so in the likely event I would like to draw on it during a downturn to invest in my business I can.

    Every day a school day eh
    • EdSwippet
    • By EdSwippet 2nd Jan 18, 5:06 PM
    • 715 Posts
    • 668 Thanks
    EdSwippet
    • #9
    • 2nd Jan 18, 5:06 PM
    • #9
    • 2nd Jan 18, 5:06 PM
    Just whether this is the most cost effective platform. 12.50 a trade and a small annual fee I think. Doesn't seem too bad to me, perhaps there are better out there?
    Originally posted by oz0707
    Halifax Sharedealing and its alter-egos iWeb and Lloyds Sharedealing Direct are pretty much as cheap as they come for decently sized fund holdings. Hargreaves Lansdown is one of -- and perhaps the -- most expensive.

    Your actual cost with Halifax would depend on how much you trade in a year, but by way of example, two trades and one annual management charge there comes to 37.50. By comparison, Vanguard charges 0.15% to hold their funds directly with them. So on these assumptions, Halifax would be the cheaper place to hold Vanguard funds once you hold more than 25k in total.

    If you're going to be trading more actively, investigate regular investing discounts, or perhaps a Lloyds account, with a 40/year charge but just 1.50 for fund trading.

    And yes, platform pricing is currently an unholy mess of niche charges, fees, and other things that make direct comparisons among platforms far more complex than it should be. So much so that there are now online tools that try to do the comparisons for you.
    • bostonerimus
    • By bostonerimus 2nd Jan 18, 5:08 PM
    • 1,945 Posts
    • 1,283 Thanks
    bostonerimus
    I'm tempted to be flippant in my answer to the OPs question, but I won't. You are not an idiot, just a bit uneducated and it looks like you are doing sensible things.

    You can buy Vanguard funds with Halifax in your existing ISA or you can open another one with Vanguard, but you'll have the usual limits.

    For a beginner a multi-asset fund like the Vanguard Lufw Strategy is good as it gives you a good mix of stocks and bonds in a single fund. Take some time to understand how whatever fund you buy is invested.
    Misanthrope in search of similar for mutual loathing
    • green_man
    • By green_man 2nd Jan 18, 8:44 PM
    • 206 Posts
    • 101 Thanks
    green_man
    Halifax comes into its own with higher fund values on which you don!!!8217;t trade much, however they will fulfil your needs here fine and unless you are regularly trading (which it sounds like you won!!!8217;t be) the difference in charges won!!!8217;t be worth worrying about at present.

    You could read up about multi asset funds which would be a reasonable place to start, however you should be wary if you don!!!8217;t think you can commit to 5++ years investments and won!!!8217;t panic sell when the inevitable crash/correction comes in a few weeks/months/years time.
    • AlanP
    • By AlanP 2nd Jan 18, 10:48 PM
    • 1,206 Posts
    • 866 Thanks
    AlanP
    You've spoken about Ida's and maybe needing the cash back out to use as working capital for your business, you have also mentioned saving towards retirement.

    Depending on you age and what you can spare a Pension might be worth looking at.

    Are you self employed or is it a Ltd company?

    Advantages and disadvantages but may be an option for some of the money.
    • oz0707
    • By oz0707 3rd Jan 18, 9:18 AM
    • 538 Posts
    • 147 Thanks
    oz0707
    Ltd company. I've not looked into pension or sipp as of yet however have an unwillingness to lock money into a scheme where I may be penalised unfairly in future. Who knows what government will be in charge when I'm ready to retire. Atleast with an isa investment it's already been taxed!

    As I say above I seem to have 2 seperate goals. It wouldn't be a case of panic selling in a downturn. That is when I would likely need the cash for opportunities in business. So really I need to find something low risk that keeps up with inflation for this.

    Second goal would be to start making investments in one of these funds/trackers of which vanguard appears to be the 'fit and forget' choice. Am I right in thinking the exit goal with this type of investment is to sell/draw down when you eventually need it? How long have these funds been around for? I read they are owned by the investors. I worry will they still be around in 30-40 years?!
    • AlanP
    • By AlanP 3rd Jan 18, 10:29 AM
    • 1,206 Posts
    • 866 Thanks
    AlanP
    Vanguard, for example, have ben going since the 70s I think in the US. It is the US investors that own it BTW, not investors outside US so you wouldn't be an "owner".

    Even if Vanguard were not around in 20/30 years time - so what? All that would happen is Vanguard announce they are to cease trading, you sell your Vanguard funds (all they do is own shares in hundreds / thousands of companies + Bonds etc) and buy L&G or HSBC or any of the other thousands of funds on offer from other providers. In fact this is no different whether it is via a Pension or via an ISA.

    If you don't think that is a long enough track record to indicate they are here for the long haul look at Investment Trusts, some of those have been around for over a 100 years.

    I take your point about tying money up in a pension (can't be accessed until 55 at the moment, will probably rise to SP age - 10 years so say 57/58 at some stage), but there are significant tax advantages particularly if your Ltd company makes the contribution as an employer thus reducing taxable profits.
    • oz0707
    • By oz0707 3rd Jan 18, 11:38 AM
    • 538 Posts
    • 147 Thanks
    oz0707
    So just being clear if vanguard or any other fund were to announce they were to cease trading the fund would not drop in value as a share would with bad news? Does this mean the value of the fund on any given day is effectively the value of all the shares and bonds the funds hold? There is no premium built into the price?

    What I do think I need to do is open Lisa for this route asap. Although I have already funded s&as isa this year although not maxed. If I have 30 years of working left then 30*5000 150k of which I've only had to put 120k in. Obviously plus any gains from investment. Is this Lisa designed to help people save for retirement specifically self employed who wouldn't benefit from generous employers schemes?
    • jimjames
    • By jimjames 3rd Jan 18, 12:24 PM
    • 12,653 Posts
    • 11,322 Thanks
    jimjames
    Yes just seen ISA limit increasing. All of a sudden might not be maxing out ISA limit each year, quite a commitment!
    Originally posted by oz0707
    The ISA limit isn't increasing, it's staying at 20k as per this year. It was previously just over 15k. I wouldn't expect the level to rise further in the near future.

    It's certainly easy enough to have funds and shares in the same ISA with Halifax or iweb so that's not a problem.

    However if you have your own business then a pension may be a better option for tax efficiency?
    Remember the saying: if it looks too good to be true it almost certainly is.
    • AlanP
    • By AlanP 3rd Jan 18, 1:24 PM
    • 1,206 Posts
    • 866 Thanks
    AlanP
    So just being clear if vanguard or any other fund were to announce they were to cease trading the fund would not drop in value as a share would with bad news? Does this mean the value of the fund on any given day is effectively the value of all the shares and bonds the funds hold? There is no premium built into the price?
    Originally posted by oz0707
    The fund price is the sum of all the constituent investment values on that particular day, at a particular time. Many publish their "price" at around Noon based on previous days market closing prices so not a "real time" price.

    What I do think I need to do is open Lisa for this route asap. Although I have already funded s&as isa this year although not maxed. If I have 30 years of working left then 30*5000 150k of which I've only had to put 120k in. Obviously plus any gains from investment. Is this Lisa designed to help people save for retirement specifically self employed who wouldn't benefit from generous employers schemes?
    Originally posted by oz0707
    LISA can only be opened by under 40s and can only be contributed to until Age 50 (from memory), and accessed from Age 60.

    As I have said and Jim has said you can benefit from a "generous employer scheme" - you can be as generous to yourself as you want / can afford to be.

    Mix and match might be your best option - Pension (via Ltd company), S&S ISA and/or LiSA plus retain a reasonable cash pot.
    • oz0707
    • By oz0707 3rd Jan 18, 1:47 PM
    • 538 Posts
    • 147 Thanks
    oz0707
    Is there a thread or Best Buy for Lisa platform. I read the mse guide. I see nutmeg although at first glance it seemed a bit hybrid although seems popular on this forum. Likewise H&l is mentioned on mse guide but bad things said on forum
    • oz0707
    • By oz0707 5th Jan 18, 9:42 AM
    • 538 Posts
    • 147 Thanks
    oz0707
    Coming back to this i've done a bit more research and opened my LISA. (h&l in the end). Now to just pick a fund. Originally I fancied some of that vanguard LS but the more I look into it i'm steered towards an Index tracker. I'm relatively young, this 4k a year will amount to not a great percentage of my overall wealth and I have no desire to have a UK based weighting - Why do most investors preserve a UK weighting? I tend to think along the lines of, if the UK economy does poorly we will all feel the effects (higher prices, less investment etc etc) so why weight your investments to home country? I also don't see the need for the securities/bonds element of VLS for my LISA. I am already diversified in terms of holding cash so with this 4K a year in particular I think it's just sensible to chuck it into a cheap global tracker and let it do its thing. Sound sensible?

    Hence I am looking at global trackers.
    Fidelity Index World Fund P (what does the p stand for?) @ .13%
    HSBC FTSE All-world Index Fund C (what does the c stand for?) @ .21%

    What at the pro's and cons of both these? I like the fact the HSBC variant supposedly has an emerging market component. I don't like the fact it's nearly twice the price, but on such a small amount is it worth thinking about?

    Are there any other funds I am missing which tick my boxes? I've basically just looked on Monevators best buy...

    Thanks
    • AlanP
    • By AlanP 5th Jan 18, 10:00 AM
    • 1,206 Posts
    • 866 Thanks
    AlanP
    Vanguard LS 100 does not have Bonds, it is all Equities (but does have a UK bias).

    Most people in developed markets / economies want an element of home bias as that is the currency they are earning and spending. Overseas investments introduce currency issues that can have a significant impact. If you are an investor living in, say Russia, you might want to deliberately avoid a home bias (or maybe any home exposure at all), preferring US / UK / EU / Japan etc instead.

    The value of globally diversified UK investors' pots went up quite a lot post the Brexit vote but a lot of that increase was down to the relative value of v $ v !!!8364; etc. As the fell the UK reported value of your investment in MSoft went up, the $ value of MSoft shares may not have changed.

    Vanguard also offer a global / all world tracker as do many providers. Each will have a slightly different take on what "global" is and what an Emerging Market is.

    Look at the specific breakdowns on the factsheets and/or Trustnet, Morningstar to get a feel for that.

    Have a look at the Tracking Error as well, the closer to the Index return the better as matching the Index is your objective. Some will be tracking the same Index, some will track a different one so be aware when doing a direct comparison.

    Worth noting that the typical global fund will be all large companies, might be worth having a smaller %'age in a Small Cap fund alongside to complement.
    Last edited by AlanP; 05-01-2018 at 10:03 AM.
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