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For the simplistic non educated saver, Vanguard (or similar) has been the answer in the face of might-as-well-be-nothing savings rates, or at least limited time/accounts with ceilings option available.
So why is my instinct nervously twinging about moving our life savings from a 0.01% earnings account to a Vanguard Lifestrategy fund? Or should I just get on with it and look at it again in 20 years? I find this odd bearing in mind I have 2/3rds of my pension in an HL SIPP which doesn't concern me.
Because the 0.01% will only diminish through inflation (or a bank robber).
Is the Vanguard fee acceptable? How does their profile compare with your HL Sipp? Do you have about 3 months outgoings (or more if you're feeling cautious) available to access at very short notice-cash/premium bonds etc?
Are you putting all of your savings in the one basket?
That's my first question/concern.
Vanguard fees are really low, that's one of the main attractions.
I have a good chunk of my life savings in a Vanguard LifeStrategy fund, if that makes you feel any better, very little in cold hard cash (and the main chunk of my pension with HL, FWIW)
Are you putting all of your savings in the one basket?
Not really, it's a hugely spread basket.
Vanguard lifestrategy 60/40 or 80/20 is the default answer.
It will be put in many thousands of baskets for you around the globe, the fees are as low as possible, and it's easy.
Don't over think it and don't do it unless you're thinking 10 years plus. Otherwise, just go for it.
Given the way the market went yesterday, I would not buy in just now.
Wait a few days/ weeks for the pessimism/winter/ Brexit to kick in again and then buy.
Most of my shares went up between 25% and 98% in the space of three days this week*. I fully expect them to go down again between 20% and 66% again once the Pfiser euphoria wears off.
Buying right now is a bad idea IMHO.
* Alas, most of those holdings were tiny as I'd already sold most
So why is my instinct nervously twinging about moving our life savings from a 0.01% earnings account to a Vanguard Lifestrategy fund?
Maybe because the Dow was at an all-time high two days ago?
Not really, it’s a hugely spread basket.
In one sense it is, in another it very much isn't - Vanguard itself isn't infallible, what if they have a massive accounting scandal? Don't get me wrong, I have a six figure sum with them, but I also own index trackers from Blackrock, iShares and a couple of others.
Also re. Lifestrategy funds in particular, they are overweight the UK (17% of the total fund IIRC). Fine if you're optimistic about the FTSE - I'm not.
Totally get your reluctance. I kept my savings in cash (in an ISA, not under the mattress) for ages while they did nothing. A few years ago I bit the bullet and bought a few funds. Turned out ok and they've gone up nicely. Sometimes they go down, mostly they go up. As mentioned timing is not great as prices just shot up. One way to smooth out the peaks is invest in several goes. eg a few thousand each month until you have moved it over.
What's the money for and when do you want it?
If you are using this as near cash I am not sure it would be the right investment choice.
If you were planning for 5+ years that's a different matter.
They are diverse pots but that doesn't mean no risk nor mean you get a better than 0.01% return, especially in the current market bubble.
Do you have about 3 months outgoings (or more if you’re feeling cautious) available to access at very short notice-cash/premium bonds etc?
I don't have anything in cash, pretty much 100% stocks and shares (maybe 0.5% bonds). If I suddenly need cash, I'll just liquidate some stocks - no big deal, takes less than 24 hours to get the money.
Fine if you’re optimistic about the FTSE – I’m not.
Agreed, I have very little in the UK markets, it's performed terribly over the last few years and I don't really see that changing with Brexit etc.
My portfolio is mainly US stocks which have done very well and continue to do so.
Given the way the market went yesterday, I would not buy in just now.
The best time to buy stocks / plant a tree is 10 years ago, the second best time is now. You can't time the market, so don't bother. Just buy good companies or funds and hold them for a long time.
kept my savings in cash (in an ISA, not under the mattress) for ages while they did nothing. A few years ago I bit the bullet and bought a few funds. Turned out ok and they’ve gone up nicely.
I've more than doubled my money over the last 10 years by just buying and holding funds, beats cash savings by a mile...
The beauty of the Vanguard setups is the sliding scale of bonds/equities. Have some investments with an active manager but they *tend* to be in equities. Just last month started to unwind my own active holdings (in IT's mostly) into Vanguard 20/80 and 40/60. The retirement ("Target") stuff looks even more fire & forget.
The beauty of the Vanguard setups is the sliding scale of bonds/equities.
That used to be the thinking when you had to buy an annuity at 65, but given annuity rates are so poor and you don't have to buy one; very few people are buying them now.
If you're going to go down the draw down route then staying invested in S&S makes sense as you'll get continued growth, if you switch out into bonds, that growth will be tiny / non existent. Obviously you have the risk of market ups and downs, but so far the market has recovered after every dip and continued rising....
The best time to buy stocks / plant a tree is 10 years ago, the second best time is now.
As the old adage goes; it's not about timing the market, it's about time in the market.
So to try and answer all the questions....
I have all of our savings split between NS&I income bonds, Premium Bonds & its ISA which both reduce to 0.01% at the end of the month.
I'm moving some of it to max out the Premium Bonds. This is because that amount corresponds to how much we need to settle the mortgage in 48 months time (no point now as the exit fee costs us more than 48 months interest payments reducing on an annual overpayment basis) So in PB's its safe until then and who knows I might win something on top. Yes, the instant access ISA represents 6 months bills.
The rest isn't doing anything for me of course and I'm in no rush to move it and was thinking there may be a slump in January (brexit) to take advantage of. Its for long term in general with a bit of potential dipping in and out for projects like new bathroom out vs any payments in - although if I knew I was getting a new bathroom next summer I save the commission rather than touch the savings.
Ultimately its for us when the kids leaves school / our retirement in 12 years or so. Hence, a savings account with 1.5% for 12 months or with a £100pm max payment won't cut it.
The rest isn’t doing anything for me of course and I’m in no rush to move it and was thinking there may be a slump in January (brexit)
There may be a slump in the FTSE in Jan. But if the £ tanks, the FTSE may appear more attractive to foreign investors, in which case we might actually see a post-Brexit bump. A drop in the £ will also see the value of overseas shareholdings increase when translated back into sterling for British investors. Ref: the big gains in 2016 post-referendum.
For that reason I'm going to be maxing out this year's ISA allowance before Jan.
You see this (finbars post ^^) is stuff I don't know, and don't want to understand as I'm a paranoid over thinker 🙂
But I do want our money to be doing some work for us and not vanishing.
You see this (finbars post ^^) is stuff I don’t know, and don’t want to understand as I’m a paranoid over thinker
If you make sure it's FSA regulated and have less than £86k (IIRC) in each provider, then the FSA underwrites it. NB If you invest with the big players the odds of losing your money are close to zero, so don't worry about it. I have my pension split over four providers just to decrease the risk of one of them getting hacked. I fully expect to get my money back even if they did get hacked, I'd just rather be working about 25% than 100% if it were to happen.
As for timing / markets going up / down, no one knows what will happen and no one knows when it will happen (which is why active funds don't perform any better than trackers*). Just have a diversified portfolio and leave it alone.
* Active managers struggle to prove their worth in a turbulent year
If you don't have an FT subscription the TL;DR version is: Active fund managers said anyone can make money is a boom year, but it's when the markets dip that their expertise comes into its own. Turns out they don't have any expertise and just loose money as well.
Ok thanks, I do appreciate all the advice. I opened an ISA and General account with Lifestrategy 60/40 a while ago just to have the, available which I intend to use. I can see from my HL app when the markets go in a general direction so if it takes a downturn after end November I’ll stick some in each month as advised over 6 months rather than all at once.
Hopefully over 12 years the general direction will be up.
Vanguard seem to take 2-3 days to make the transaction happen, does anyone know when they actually buy? If I buy today and they complete on Friday which stock value am I getting, today’s or Fridays?
Hopefully over 12 years the general direction will be up.
Definitely, you'd really struggle to pick a 12 year period where you wouldn't make a gain and even if you found one, wait a few months and you'd be back in the black.
Vanguard seem to take 2-3 days to make the transaction happen, does anyone know when they actually buy? If I buy today and they complete on Friday which stock value am I getting, today’s or Fridays?
Pretty normal to take a few days. Don't sweat it, no one can time the market. You get the price when the sale/buy takes place. Vanguard is not a platform aimed at day traders who try and time the market within minutes / seconds. It's aimed at people buying a tracker and waiting 10+ years, so a day here or there is lost in the noise.
Kryton, if your cash is in an ISA, don't take it out. You can transfer the ISA to somebody like HL or ii and buy Vanguard funds, keeping the benefit of the ISA. Maybe you can transfer the ISA direct to Vanguard, I don't know.
Yep, you can move an ISA between providers very easily, normally just two forms (one at each end).
For that reason I’m going to be maxing out this year’s ISA allowance before Jan.
Wotcha buying?
That's a tough one, you'd definitely want to diversify and the asset balance is critical to limit your risk.
In the current climate, I'd be going 60% coke, 40% hookers. Don't risk running out of energy...
Question on s&s isas. I have a HL isa form last year and would like a vanguard one this year. However I would also like to continue to add to the Hl isa.
If I do add to the hl isa this fy, does that count as my one s&s isa and I can’t open another? I won’t be getting anywhere near the max amount you can take out.
Hoping I’ve misunderstood the rules
I think you can only subscribe to 1 in a year.
I think you can transfer from one to another in the same year.
That's certainly what I'm doing. I've put £25k in since April.
Open the Vanguard one with the max amount. Then transfer what you need into the other.
/Awaits ETYISA processing with a certain amount of trepidation...
AIUI You can open as many as you like as long as you stay within the £20k/year allowance.
If you open several with the same provider they roll them into one normally (at least HL does).
I’ve put £25k in since April.
You only get tax-free gains on the £20k?
Kryton, if your cash is in an ISA, don’t take it out.
I won't, thanks. I'll wait until April '21 and the interest is paid from NS&I, then move it to the Vanguard ISA plus £20k moved from the "General Savings" into that to use my 2021 ISA allowance. I think thats allowed....
AIUI you can only open and contribute to one type of ISA in each tax year.
To answers the OP’s question - vanguard would be a sensible option. Other platforms are available, but the site is good, it’s very simple and the charges are about as low as it gets (for larger sums other platforms can work out cheaper)
If you CBA researching active funds then passive investing is a very good strategy - it requires less thought and over the long term is considered to deliver better returns.
Monevator and OccamInvesting are the two best passive investing website I’ve found, both UK centric
Biggest issue for U.K. people to think about now is what currency they have to invest.
If your pot is in Sterling then what happens to the pound in the next 60 days is going to have a huge effect on your investment.
Getting pounds into global stocks now (even at US all time highs) will turn out to be an ok plan by January if GBP falls at new year. On the other hand if there’s a deal and Sterling gains then no investment will be better than watching your GBP (denominated investments) appreciate.
To offer a contrarian view to speccyguy re: FX, my reading on the subject says that over the long term, currency fluctuations should revert to mean / have little impact on your returns.
Over shorter periods, foreign investments will of course be influenced by market returns + currency movements
Wotcha buying?
Difficult - it's hard to see much value anywhere at the moment. IMaybe ISHARES JAPAN EQUITY INDEX, as I'm definitely underweight Asia.
I’ve put £25k in since April.
You only get tax-free gains on the £20k?
No. I transferred £5k from another ISa. I'm answering the bloke just before me who says he wants to open a new isa and also contribute to his existing one. He can only move money into an ISA wrapper with one company in a year.
So I'm saying, fine, do that. Open the new Isa with 20k and then move a chunk of it across to the other ISA.
Problem solved, he's put money into two isas in one year.
Now until January is 60 days. The currency fluctuations are going to be proportionally very large as everyone tries to work out how fked up Britain is going to become. When it is clear what level of fkedness is expected normal business resumes. To ignore the wild ride Sterling is in for for the rest of the year is not smart if the OP is worried about his investment performance. Dropping 10% out of the gate will take a long time to recover from.
Seems to be a lot of short term thinking.
Do loads of research upfront; use a chartered financial planner - cut above bog standard IFA - or DIY.
Identify 'appetite' for risk and investment objectives.
Have clear understanding of fees if using any sort of advisor.
Spread the risk through a diverse portfolio.
Review options, make decision, invest.
Investments should be made for the long term.
Try not to look at performance every day - it's pointless.
Do full review of performance annually; adjust portfolio if necessary to reflect objectives.
As for...
Dropping 10% out of the gate will take a long time to recover from.
The past 8 months have proven that wrong; my (relatively) risk averse portfolio dropped by >10% immediately following lockdown and has now recovered by c15%.
The past 8 months have proven that wrong; my (relatively) risk averse portfolio dropped by >10% immediately following lockdown and has now recovered by c15%.
My high risk portfolio has had some massive swings in the last 18 months, but every dip has been followed by a higher rise, so the trend has (so far) been upwards....
Anybody asking you to move your entire life savings in one lump is probably a crook so I’d avoid!
Investigating your wife's savings
“ Anybody asking you to move your entire life savings in one lump is probably a crook so I’d avoid”
Statistically investing a lump sum in one go IS the correct thing to do, as markets go up more than they go down (hence why people invest) dripping in / pound cost averaging feels safer tho, I understand that.
I think of all the major market crashes, only the 1929 crash would have made a discernible difference to investment returns over the long term (I.e investing at the top vs. Investing at the bottom of the 29 crash) all other crashes it’s made negligible difference to long term returns.
It truly is time in the market that delivers results, not market timing
There’s a good article on occam investing that Covers it in more detail.
Put 1% into bitcoin it's up 40% this month, likley to fall a bit as people may take proffit so keep an eye on it. Now that Paypal are accepting it in the US its likely to gain a lot more intrest.