New to investing (uk)

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tonywesley
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Joined: Fri Apr 20, 2018 1:39 am

New to investing (uk)

Post by tonywesley » Fri Apr 20, 2018 2:01 am

Having consolidated all my pensions since 18-49 I have amassed a amount of £280,000 which I need to re-invest.

Any advice on if i am doing the corect thing

I am thinking about £200k in vanguard lifestrategy 80 because this is going to be not just for 5yrs but probably until I die and drawing down at retirement.

And the other 50k in vanguard high dividend and the last 30k in 10 x 3 funds that have performed good over the last 5yrs but not index ( probaby high risk emerging markets or japan / china ).

Am I doing the correct thing or do you think I should take professional advice at 0.5% per year ? I am trying to make it has diversified has possible but any different suggestion would be welcome.

Or what funds would everyone choose ?

Needs to be simple and not swapping, changing every year because I am a believer of long term wins the rabbit every time :-)

Any help would be great
Last edited by tonywesley on Fri Apr 20, 2018 3:48 pm, edited 1 time in total.

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LadyGeek
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Re: New to investing

Post by LadyGeek » Fri Apr 20, 2018 9:34 am

Welcome! By your use of £280,000 (not USD), are you in the UK? If not, what is your home country?

The Vanguard LifeStrategy Funds are fine.

It is important to know your home country so we can help you select the appropriate funds. Selecting funds based in the US will have complications due to taxation and currency rates.
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Valuethinker
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Re: New to investing (uk)

Post by Valuethinker » Sat Apr 21, 2018 12:03 pm

tonywesley wrote:
Fri Apr 20, 2018 2:01 am
Having consolidated all my pensions since 18-49 I have amassed a amount of £280,000 which I need to re-invest.

Any advice on if i am doing the corect thing

I am thinking about £200k in vanguard lifestrategy 80 because this is going to be not just for 5yrs but probably until I die and drawing down at retirement.
That's fine, but you will have to live with the volatility. It's a good rule of thumb that stocks can drop 50% in a year, and bonds 10%. Thus, you could be in a situation where you would be down 42% one year. Think how that's going to feel.

A lot depends on how much you are adding each year in savings and how long you expect to work before retirement.

I recommend 60/40 for most people (equities/ bonds). Bear markets, when they come, are brutal and painful. However if you have a lot of future contributions to make, that reduces the risk of being high in equities.
And the other 50k in vanguard high dividend and the last 30k in 10 x 3 funds that have performed good over the last 5yrs but not index ( probaby high risk emerging markets or japan / china ).
You don't need this. A global equity index fund will do it (including Emerging Markets). Or, if you are in a developed market index fund, then 50% that/ 10% Emerging Markets will do it (52%/ 8% is probably more accurate).

https://www.vanguardinvestor.co.uk/inve ... _fund_link

right it has EM. So do no more.

The top performing market over the last few years has probably been USA. That does not mean we should overweight it now.

Unless you are trying to live off your dividend income, I would not recommend a high dividend fund. Remember that Warren Buffett of Berkshire Hathaway, the world's most successful, has never paid a dividend to his investors (he buys back shares in BH, which has similar effects, but an Income Fund would not own those shares).
Am I doing the correct thing or do you think I should take professional advice at 0.5% per year ? I am trying to make it has diversified has possible but any different suggestion would be welcome.

Or what funds would everyone choose ?

Needs to be simple and not swapping, changing every year because I am a believer of long term wins the rabbit every time :-)

Any help would be great
One question

This is a SIPP? So you need to look into charges. Vanguard UK does not do pensions at the moment, AFAIK. My Standard Life pension lets me uses *some* Vanguard funds. I pay 0.8% pa fees. Ted Swippett, here, is the expert on the fees the different platforms charge.

You are on the right track, I think you are being a bit bullish on the equity/ bond split. But in my nightmare scenario, above, 80/ 20 would go down by 42%. 60/40 would go down by 34%. You might not think that is enough difference to care about.

But the Vanguard funds will do it. Either the 80/20 or the 60/40 or, if you feel the need to compromise, half in each (which equals 70/ 30) ;-).

You don't need a Financial Adviser for this - that's more on the tax side and your options when you actually retire- -even then you can DIY.

Rest assured, there will be another bear market. And rest assured, it will feel pretty terrible when it comes. It did in 2000-03 (about 35% down) or 2008-09 (about 50% down at worst). If it's another 1972-74 (about 80% for the UK) well, that really is unpleasant.

tonywesley
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Joined: Fri Apr 20, 2018 1:39 am

Re: New to investing (uk)

Post by tonywesley » Sat Apr 21, 2018 12:17 pm

Thanks for that a lot. I think you have changed me from 80/20 to 60/40 knowing this or even 70/30. I do like vanguard funds.

I have always done index funds and had bad and good years but over all been pretty much upwards for the last 20yrs.

I have a iii sipp with low costs. Will look at again in drawdown again because some are better than others.

Thanks for this advice and time, really helpful

Valuethinker
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Re: New to investing (uk)

Post by Valuethinker » Sat Apr 21, 2018 3:42 pm

tonywesley wrote:
Sat Apr 21, 2018 12:17 pm
Thanks for that a lot. I think you have changed me from 80/20 to 60/40 knowing this or even 70/30. I do like vanguard funds.

I have always done index funds and had bad and good years but over all been pretty much upwards for the last 20yrs.

I have a iii sipp with low costs. Will look at again in drawdown again because some are better than others.

Thanks for this advice and time, really helpful
it's really a matter of choice.

One thing is clear about financial markets. "Forecasting is hard. Especially of the future" (Yogi Berra) ;-).

But we can say that bonds are likely to have very low returns. UK gilts are at 1.5% yield, roughly (and thus likely to return less than expected of inflation of around, say 2%). Stocks? It's unlikely that stocks will do much more than 4% real (maybe 3%) so say 6% with inflation. This is all before costs.

Everyone has a different risk tolerance. If you are continuing to make large pension contributions, then a high equity weighting is less of a concern, because future contributions will make up for losses, hopefully.

However as I get closer to retirement (i am a little older than you) I get more risk averse. There is no longer time to make up any losses. A long bear market would finish me off. That makes me more cautious. And my experience of bear markets is they are pretty brutal. 2008-9 was short and relatively fast. 2000-3 was much longer and more drawn out (but in the end, shallower). UK markets had not recovered their 2000 high when 2008-09 hit.

One of the Vanguard Lifestrategy Funds will probably meet your needs. If 80 /20 is too much equities, 70/ 30 may be a good compromise (which means you hold half your money in 60/ 40 and half in 80/ 20).

You don't need to get fancy with other funds, and you certainly don't need a financial adviser. This is not an exact science-- whatever allocation we choose it will not have been the absolute "right" one - we just hope to get it more right than wrong.

Valuethinker
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Re: New to investing (uk)

Post by Valuethinker » Sun Apr 22, 2018 9:25 am

tonywesley wrote:
Sat Apr 21, 2018 12:17 pm
Thanks for that a lot. I think you have changed me from 80/20 to 60/40 knowing this or even 70/30. I do like vanguard funds.

I have always done index funds and had bad and good years but over all been pretty much upwards for the last 20yrs.

I have a iii sipp with low costs. Will look at again in drawdown again because some are better than others.

Thanks for this advice and time, really helpful
Vanguard Target Retirement 2035 would probably meet your needs. Good spread of assets roughly right asset allocation. Bond weighting will increase over time.

tonywesley
Posts: 3
Joined: Fri Apr 20, 2018 1:39 am

Re: New to investing (uk)

Post by tonywesley » Sun Apr 22, 2018 5:45 pm

I looked at the target retirements funds also but I am not worried about really low bonds in later life because I am also in a government defined ( guaranteed) pension up till I finish working.

I have decided on 60/40 and hoping for just over 5-6%. I will be happy with this over a 20yrs period. Hopefully anyway.

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