Author Topic: New UK investor looking for Vanguard alternative  (Read 5768 times)

Ease

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New UK investor looking for Vanguard alternative
« on: April 20, 2016, 07:25:11 AM »
All the investment tips I get from FIRE blogs always mention Vanguard, but it seems nigh impossible to invest in a Vanguard fund from the UK with anything less than 100,000.

One alternative I've found is Nutmeg, but I can't find any reliable/trust-worthy reviews about them.

Any advice for this investment-naive Brit would be greatly appreciated!

Woody Viet

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Re: New UK investor looking for Vanguard alternative
« Reply #1 on: April 20, 2016, 07:33:28 AM »
Which markets are you looking to invest into? You can actually buy some of the Vanguard USA funds, just google them and make sure they're in this list first: https://www.gov.uk/government/publications/offshore-funds-list-of-reporting-funds

VanguardUK also does ETFs which have no minimum investment and I'd imagine that will be enough to meet your needs. This is the part of the site with them on: https://www.vanguard.co.uk/uk/portal/investments/all-products?productType=etf

Playing with Fire UK

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Re: New UK investor looking for Vanguard alternative
« Reply #2 on: April 20, 2016, 07:42:33 AM »
Check out Monevator's list of online brokers. http://monevator.com/compare-uk-cheapest-online-brokers/ [Although it is due for an update, eg Selftrade are now charging a percentage fee] Most of the ones that I checked out you could buy nearly all the Vanguard funds. Are you looking for an obscure or new fund?

Don't use Nutmeg - they are expensive and shit.


worms

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Re: New UK investor looking for Vanguard alternative
« Reply #3 on: April 21, 2016, 01:29:38 AM »
You might be better raising this question on the UK Money Saving Expert forum at http://forums.moneysavingexpert.com/forumdisplay.php?f=17.

Remember that differences in business and personal taxation between US and UK can mean that the best form of investment for your circumstances may be different.

mohawkbrah

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Re: New UK investor looking for Vanguard alternative
« Reply #4 on: April 21, 2016, 01:45:28 AM »
there are a few vanguard funds that you can buy into with minimum 200/

vanguard USA index funds

Vanguard UK equity income fund

since you're in the UK which brokerage is your ISA in?

Butterfingers

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Re: New UK investor looking for Vanguard alternative
« Reply #5 on: April 21, 2016, 03:06:39 AM »
I have money in Vanguard Lifestrategy 100 Accumulation in an ISA wrapper through Fidelity. They have a minimum lump sum investment of 1000, and a minimum of 50 for monthly contributions. 0.24% TER, so fairly low cost, with no dealing fees (and Lifestrategy has automatic rebalancing).

The 100,000 minimum is to invest directly with Vanguard. As others have said, you'll need to go through a broker.

Ease

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Re: New UK investor looking for Vanguard alternative
« Reply #6 on: April 21, 2016, 03:22:43 AM »
Ah hah! Now we stumble across my true ignorance!

I don't have a broker/brokerage. I don't really know what they are, nor how to get one/work out which is best for me.

I don't have an ISA anymore either, that went on a moderate house deposit.

What I have is 5000 in a current account paying 4%, and 1200 more per month to go into savings.

I'm an engineer by trade, and am generally pretty savvy when it comes to maths, but for some reason it doesn't carry over to finances. I can do all the arithmetic, but all the financial jargon completely defeats me.

I hate feeling like a total moron; could someone put me out of my misery?

Butterfingers

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Re: New UK investor looking for Vanguard alternative
« Reply #7 on: April 21, 2016, 03:55:22 AM »
If, like me, you are lazy (and not confident in managing and balancing your own investments), then Vanguard Lifestrategy through Fidelity (fidelity.co.uk) is a good choice. They have a balance of UK and international indexes, and automatically rebalance to keep your allocation roughly the same. Here's an overview of the Lifestrategy funds for the UK:

https://www.vanguard.co.uk/uk/portal/investments/all-products?assetType=BALANCED

They are divided between equity (stocks) and bonds. Equity has bigger risks and bigger rewards. Bonds are seen as safer, but with historically lower rewards. People tend to adjust the allocation as they get closer to FI so you might start off with 80% equity/20% bonds, and move through 60/40, 40/60, 20/80 as you get older. I have 100% equity at the moment because I have relatively high risk tolerance and I'm a long way out from retirement.

So, choose a fund, open an ISA with Fidelity, set up a direct debit that's how I did it. Bear in mind that if you chuck all your savings and monthly contributions at it, you'll exceed the ISA limit of 15,240, so if you want to get heavily into Vanguard and won't need the cash then you could put in 3,240 up front and 1,000 a month thereafter (assuming you haven't paid into an ISA in the first few weeks of this new tax year).

With the extra 200 a month you could put it in a SIPP or just keep it in cash at 4%. In fact if you're a higher rate taxpayer SIPPs become more attractive because they're essentially pre-tax contributions. I'm a basic rate taxpayer, so I haven't looked into it too closely.

Caveat lector: I am by no means an expert this is just my experience and comes with no warranty, express or implied. Use anything here at your own risk.

Friar

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Re: New UK investor looking for Vanguard alternative
« Reply #8 on: April 21, 2016, 06:06:27 AM »
I currently invest in the LifeStrategy 100% fund via rplan who also charge 0.35% on your investments and have a nice web interface.

Bear in mind a couple of things about the LS funds:

1) The current ongoing charge is 0.24% - slightly higher than if you were to attempt to buy individual market funds but low enough (in my opinion) to warrant access to Vanguard funds with auto rebalancing.

2) Buying a LS fund in the UK incurs a 0.1% stamp duty fee on purchase. i.e. if you invest 100 you only actually get 99.90 worth of funds. - I'm not sure if this applies to other Vanguard funds but have a feeling it might do, and I'm also not sure whether you get charged this again if, for example, you wished to transfer from one Vanguard fund to another within your ISA.

Butterfingers

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Re: New UK investor looking for Vanguard alternative
« Reply #9 on: April 21, 2016, 07:03:59 AM »
2) Buying a LS fund in the UK incurs a 0.1% stamp duty fee on purchase. i.e. if you invest 100 you only actually get 99.90 worth of funds.
If the 0.1% duty applies on transfers then you might want to do your own basic balancing, by holding the LS100 you already have and buying LS20 funds as you get closer to retirement.

Friar

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Re: New UK investor looking for Vanguard alternative
« Reply #10 on: April 21, 2016, 09:20:32 AM »
2) Buying a LS fund in the UK incurs a 0.1% stamp duty fee on purchase. i.e. if you invest 100 you only actually get 99.90 worth of funds.
If the 0.1% duty applies on transfers then you might want to do your own basic balancing, by holding the LS100 you already have and buying LS20 funds as you get closer to retirement.

That's a good idea if you continue to add funds in as you approach retirement. The only problem is the lack of automatic rebalancing later down the line; I've not thought of a better alternative.

Butterfingers

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Re: New UK investor looking for Vanguard alternative
« Reply #11 on: April 22, 2016, 06:28:08 AM »
Quote
The only problem is the lack of automatic rebalancing later down the line
True, especially with a long retirement. Twenty years into FIRE, your exposure to equity is likely to have increased significantly.

I suppose eating that 0.1% isn't too bad if you adjust infrequently, shifting towards the LS options with higher bond ratios. I think I'll probably stick with LS100 until five years out from FIRE, then downshift to LS60 or even 40.

Friar

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Re: New UK investor looking for Vanguard alternative
« Reply #12 on: June 16, 2016, 12:15:02 PM »
Quote
The only problem is the lack of automatic rebalancing later down the line
True, especially with a long retirement. Twenty years into FIRE, your exposure to equity is likely to have increased significantly.

I suppose eating that 0.1% isn't too bad if you adjust infrequently, shifting towards the LS options with higher bond ratios. I think I'll probably stick with LS100 until five years out from FIRE, then downshift to LS60 or even 40.

I found out today that the dilution levy was removed at the end of July 2015!

https://www.vanguard.co.uk/documents/portal/press_releases/vanguard-removes-pdl-lifestrategy-funds.pdf

former player

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Re: New UK investor looking for Vanguard alternative
« Reply #13 on: June 16, 2016, 01:19:12 PM »
1200 a month looks like "maximise your 2016/17 ISA time".  So yes, look at the monevator and moneysavingexpert websites to find the cheapest ISA firm that offers Vanguard funds and away you go.  For example: a Halifax stocks and shares ISA invested in Vanguard Life Strategy.

Personally I'm treating a stocks and shares ISA as a "buy and hold", so that all my share holdings are in the ISA, added to each year, as then I don't have to worry about taxes on income or capital gains.  That means I'm looking for a fixed fee from my ISA firm rather than a percentage fee.