New investor just looking for a bit of advice

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Topic Author
Riftus
Posts: 12
Joined: Wed Sep 25, 2019 8:10 am

New investor just looking for a bit of advice

Post by Riftus » Sat Sep 28, 2019 9:55 am

Im very new to investing and looking to start a portfolio that I can slowly add to throughout my life.

I am going to be investing through vanguard due to the low fees they offer so my question is would I be best going through the lifstrategy 100% equity (or maybe 80%) or would I be best of creating my own three fund portfolio?

If I go 3 fund I am thinking

40% FTSE Global All Cap Index Fund- https://www.vanguardinvestor.co.uk/inve ... umulation-
shares?intcmpgn=equityglobal_ftseglobalallcapindexfund_fund_link
40% FTSE U.K. All Share Index Unit Trust- https://www.vanguardinvestor.co.uk/inve ... _fund_link

20% U.K. Government Bond Index Fund- https://www.vanguardinvestor.co.uk/inve ... _fund_link

Valuethinker
Posts: 39232
Joined: Fri May 11, 2007 11:07 am

Re: New investor just looking for a bit of advice

Post by Valuethinker » Sat Sep 28, 2019 11:33 am

Riftus wrote:
Sat Sep 28, 2019 9:55 am
Im very new to investing and looking to start a portfolio that I can slowly add to throughout my life.

I am going to be investing through vanguard due to the low fees they offer so my question is would I be best going through the lifstrategy 100% equity (or maybe 80%) or would I be best of creating my own three fund portfolio?

If I go 3 fund I am thinking

40% FTSE Global All Cap Index Fund- https://www.vanguardinvestor.co.uk/inve ... umulation-
shares?intcmpgn=equityglobal_ftseglobalallcapindexfund_fund_link
40% FTSE U.K. All Share Index Unit Trust- https://www.vanguardinvestor.co.uk/inve ... _fund_link

20% U.K. Government Bond Index Fund- https://www.vanguardinvestor.co.uk/inve ... _fund_link
We don't know your age and have no sense if objectives and annual investment?

I assume this us in an ISA? Have you considered also your (government required) investments via your pension? How are those invested?

Setting aside all that I do not see any reason to overweight UK stocks. So i would be 80% global index and 20% bonds.

But i would do the bonds through my pension because of the lifetime annual limit.

There is a lot of merit in just doing the life strategy fund but why 100 per cent equity?

Topic Author
Riftus
Posts: 12
Joined: Wed Sep 25, 2019 8:10 am

Re: New investor just looking for a bit of advice

Post by Riftus » Sat Sep 28, 2019 12:41 pm

Valuethinker wrote:
Sat Sep 28, 2019 11:33 am
Riftus wrote:
Sat Sep 28, 2019 9:55 am
Im very new to investing and looking to start a portfolio that I can slowly add to throughout my life.

I am going to be investing through vanguard due to the low fees they offer so my question is would I be best going through the lifstrategy 100% equity (or maybe 80%) or would I be best of creating my own three fund portfolio?

If I go 3 fund I am thinking

40% FTSE Global All Cap Index Fund- https://www.vanguardinvestor.co.uk/inve ... umulation-
shares?intcmpgn=equityglobal_ftseglobalallcapindexfund_fund_link
40% FTSE U.K. All Share Index Unit Trust- https://www.vanguardinvestor.co.uk/inve ... _fund_link

20% U.K. Government Bond Index Fund- https://www.vanguardinvestor.co.uk/inve ... _fund_link
We don't know your age and have no sense if objectives and annual investment?

I assume this us in an ISA? Have you considered also your (government required) investments via your pension? How are those invested?

Setting aside all that I do not see any reason to overweight UK stocks. So i would be 80% global index and 20% bonds.

But i would do the bonds through my pension because of the lifetime annual limit.

There is a lot of merit in just doing the life strategy fund but why 100 per cent equity?

100% equity because I’m 20 and the money is all disposable income. Also I have more time to allow the markets to rise and fall.

Also from what I have read, when creating a 3 fund portfolio it is best to make 40% national and 40% domestic

My pension investments are through work so I just pay a bit of my salary each month

actuallyxy
Posts: 35
Joined: Wed May 24, 2017 6:25 am

Re: New investor just looking for a bit of advice

Post by actuallyxy » Sat Sep 28, 2019 1:22 pm

Equal parts national and international makes sense for US investors because the US is half the global market anyway.

The UK, on the other hand, represents about 6% of the global market. Some home bias may make sense, but half of stocks in the UK is too much.

DJN
Posts: 529
Joined: Mon Nov 20, 2017 12:30 am

Re: New investor just looking for a bit of advice

Post by DJN » Sat Sep 28, 2019 1:26 pm

Hi,
have a look at the Wiki both generally and under the UK:

https://www.bogleheads.org/wiki/Outline ... _domiciles
https://www.bogleheads.org/wiki/UK_investing
Pretty much everything you need to start should be somewhere in there.
DJN
Yah shure

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RickBoglehead
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Location: In a house

Re: New investor just looking for a bit of advice

Post by RickBoglehead » Sat Sep 28, 2019 2:10 pm

Riftus wrote:
Sat Sep 28, 2019 12:41 pm

100% equity because I’m 20 and the money is all disposable income. Also I have more time to allow the markets to rise and fall.

Also from what I have read, when creating a 3 fund portfolio it is best to make 40% national and 40% domestic

My pension investments are through work so I just pay a bit of my salary each month
Many would consider that a too heavy international weighting. An 80% stock / 20% bond portfolio might have 40% international, i.e. 32% of the total (40% of 809. I would not want to be more heavily weighted international, but then again I am much less weighted that way, and 200% older.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

glorat
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Joined: Thu Apr 18, 2019 2:17 am

Re: New investor just looking for a bit of advice

Post by glorat » Sat Sep 28, 2019 8:43 pm

RickBoglehead wrote:
Sat Sep 28, 2019 2:10 pm
Many would consider that a too heavy international weighting. An 80% stock / 20% bond portfolio might have 40% international, i.e. 32% of the total (40% of 809. I would not want to be more heavily weighted international, but then again I am much less weighted that way, and 200% older.
Many US persons would consider that too heavy but this is a non-US investor forum. Personally, I would consider your international portion too light and your domestic too heavy.

YMMV

Topic Author
Riftus
Posts: 12
Joined: Wed Sep 25, 2019 8:10 am

Re: New investor just looking for a bit of advice

Post by Riftus » Sun Sep 29, 2019 3:04 am

actuallyxy wrote:
Sat Sep 28, 2019 1:22 pm
Equal parts national and international makes sense for US investors because the US is half the global market anyway.

The UK, on the other hand, represents about 6% of the global market. Some home bias may make sense, but half of stocks in the UK is too much.
Would 60/20 make more sense?

Also should I go for a global bond if I only go for one or does bond not matter as much

glorat
Posts: 349
Joined: Thu Apr 18, 2019 2:17 am

Re: New investor just looking for a bit of advice

Post by glorat » Sun Sep 29, 2019 3:11 am

Riftus wrote:
Sun Sep 29, 2019 3:04 am
actuallyxy wrote:
Sat Sep 28, 2019 1:22 pm
Equal parts national and international makes sense for US investors because the US is half the global market anyway.

The UK, on the other hand, represents about 6% of the global market. Some home bias may make sense, but half of stocks in the UK is too much.
Would 60/20 make more sense?

Also should I go for a global bond if I only go for one or does bond not matter as much
What I actually think is that you are already over complicating things on the basis that you're looking at UK funds presumably for an ISA.

If that's the case, I strongly recommend picking you AA, let's say it is 80/20 equities vs bonds then picking the corresponding Vanguard Lifestrategy fund, in this case the 80/20 flavour.

Internally, Vanguard has picked its expert choice for all the questions you are asking (including UK home bias and bond choice). Doing this way you are near guaranteed note to make a mistake. Do it yourself and you might somehow be more optimal but if you are new, which you are, you're likely to make mistakes.

Investment is simple. It's hard to stick to simple. Just buy the one Lifestrategy fund, keep funding it until you retire and never look back.

actuallyxy
Posts: 35
Joined: Wed May 24, 2017 6:25 am

Re: New investor just looking for a bit of advice

Post by actuallyxy » Sun Sep 29, 2019 3:24 am

60/20 is reasonable. It's more or less the proportion in the Lifestrategy funds, so you could go for one of them

If your expenses are in GBP, it makes sense to have your bonds in GBP too. You could just have UK gilts, but most people choose to have a global bond fund hedged to GBP.

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BeBH65
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Re: New investor just looking for a bit of advice

Post by BeBH65 » Sun Sep 29, 2019 4:46 am

Our wiki has some references related to overweighting your home-region.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles

Valuethinker
Posts: 39232
Joined: Fri May 11, 2007 11:07 am

Re: New investor just looking for a bit of advice

Post by Valuethinker » Sun Sep 29, 2019 7:59 am

RickBoglehead wrote:
Sat Sep 28, 2019 2:10 pm
Riftus wrote:
Sat Sep 28, 2019 12:41 pm

100% equity because I’m 20 and the money is all disposable income. Also I have more time to allow the markets to rise and fall.

Also from what I have read, when creating a 3 fund portfolio it is best to make 40% national and 40% domestic

My pension investments are through work so I just pay a bit of my salary each month
Many would consider that a too heavy international weighting. An 80% stock / 20% bond portfolio might have 40% international, i.e. 32% of the total (40% of 809. I would not want to be more heavily weighted international, but then again I am much less weighted that way, and 200% older.
Rick.

The UK is about 8 per cent of world markets US is about 55 per cent

There is no logic to a UK investor having a 5x overweighting in domestic stocks.

That's so obvious a point I wonder if you forgot which board you were posting on?

Valuethinker
Posts: 39232
Joined: Fri May 11, 2007 11:07 am

Re: New investor just looking for a bit of advice

Post by Valuethinker » Sun Sep 29, 2019 8:08 am

Riftus wrote:
Sat Sep 28, 2019 12:41 pm
Valuethinker wrote:
Sat Sep 28, 2019 11:33 am
Riftus wrote:
Sat Sep 28, 2019 9:55 am
Im very new to investing and looking to start a portfolio that I can slowly add to throughout my life.

I am going to be investing through vanguard due to the low fees they offer so my question is would I be best going through the lifstrategy 100% equity (or maybe 80%) or would I be best of creating my own three fund portfolio?

If I go 3 fund I am thinking

40% FTSE Global All Cap Index Fund- https://www.vanguardinvestor.co.uk/inve ... umulation-
shares?intcmpgn=equityglobal_ftseglobalallcapindexfund_fund_link
40% FTSE U.K. All Share Index Unit Trust- https://www.vanguardinvestor.co.uk/inve ... _fund_link

20% U.K. Government Bond Index Fund- https://www.vanguardinvestor.co.uk/inve ... _fund_link
We don't know your age and have no sense if objectives and annual investment?

I assume this us in an ISA? Have you considered also your (government required) investments via your pension? How are those invested?

Setting aside all that I do not see any reason to overweight UK stocks. So i would be 80% global index and 20% bonds.

But i would do the bonds through my pension because of the lifetime annual limit.

There is a lot of merit in just doing the life strategy fund but why 100 per cent equity?

100% equity because I’m 20 and the money is all disposable income. Also I have more time to allow the markets to rise and fall.

Also from what I have read, when creating a 3 fund portfolio it is best to make 40% national and 40% domestic

My pension investments are through work so I just pay a bit of my salary each month
The difference in performance between 80 20 and 100 0 is smaller than many think due to the diversification benefit. The difference in volatility is significant.

The sources you are reading are American. Theres no good rationale for a Brit to have 40% of portfolio in 8% of world developed markets.

You have to include your pension allocation in calculating your portfolio weightings, for a true picture.

Given the lifetime limit it's better to have bond exposure via pensions.

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Watty
Posts: 18077
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Re: New investor just looking for a bit of advice

Post by Watty » Sun Sep 29, 2019 8:12 am

Riftus wrote:
Sat Sep 28, 2019 12:41 pm
100% equity because I’m 20 and the money is all disposable income. Also I have more time to allow the markets to rise and fall.
One thing to keep in mind is that at 20 in addition to retirement you will likely have several different investing goals like;

1) building up an emergency fund.
2) saving up to buy a house some day(There is no hurry!)
3) saving up to pay cash for a future car.

and probably others.

These goals may change over time so your choices will not be engraved in stone but a significant amount of money should be invested more conservatively since it may be needed much sooner.

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F150HD
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Re: New investor just looking for a bit of advice

Post by F150HD » Sun Sep 29, 2019 8:16 am

this is in the UK not the US. I wish non-US threads weren't woven into the main feed. It can be confusing.
Long is the way and hard, that out of Hell leads up to light.

Topic Author
Riftus
Posts: 12
Joined: Wed Sep 25, 2019 8:10 am

Re: New investor just looking for a bit of advice

Post by Riftus » Sun Sep 29, 2019 8:28 am

F150HD wrote:
Sun Sep 29, 2019 8:16 am
this is in the UK not the US. I wish non-US threads weren't woven into the main feed. It can be confusing.
This is posted in the non us investors...

TedSwippet
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Location: UK

Re: New investor just looking for a bit of advice

Post by TedSwippet » Sun Sep 29, 2019 8:46 am

Riftus wrote:
Sun Sep 29, 2019 8:28 am
F150HD wrote:
Sun Sep 29, 2019 8:16 am
this is in the UK not the US. I wish non-US threads weren't woven into the main feed. It can be confusing.
This is posted in the non us investors...
Rather than the Board index, user F150HD might be using one of these links to the forum:

Bogleheads.org
Bogleheads.org - New posts

These will just lump everything together into one undifferentiated mass (though how anyone has time to consume this forum's activity in its entirety is beyond me!).

Anyway, if this is the cause then it's a bit of a 'known problem', but not solved yet as far as I know. A little more in this discussion:
Welcome to the new forum layout

glorat
Posts: 349
Joined: Thu Apr 18, 2019 2:17 am

Re: New investor just looking for a bit of advice

Post by glorat » Sun Sep 29, 2019 10:46 am

Even now, would be helpful if OP or mod could put [UK] in the topic title. (and optionally clean up the confusion)

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F150HD
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Re: New investor just looking for a bit of advice

Post by F150HD » Mon Sep 30, 2019 5:59 am

Riftus wrote:
Sun Sep 29, 2019 8:28 am
F150HD wrote:
Sun Sep 29, 2019 8:16 am
this is in the UK not the US. I wish non-US threads weren't woven into the main feed. It can be confusing.
This is posted in the non us investors...
um, https://www.bogleheads.org/index.php
TedSwippet wrote:
Sun Sep 29, 2019 8:46 am
These will just lump everything together into one undifferentiated mass....
that page gives a variety of topics from all forums which has always been interesting to browse (to me) vs the forum link which one has to select a specific sub forum.

Also, if one clicks the first link via a Google search, that is what it takes one to, URL above.
Long is the way and hard, that out of Hell leads up to light.

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BeBH65
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Re: New investor just looking for a bit of advice

Post by BeBH65 » Mon Sep 30, 2019 7:03 am

And the great thing about that consolidated list is that it still allows the readers to select the subforum: As non-US investor i focus on the posts preceded by "n".
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles

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