Author Topic: Basic investment advice for UK beginners.  (Read 12916 times)

Playing with Fire UK

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Re: Basic investment advice for UK beginners.
« Reply #50 on: March 13, 2018, 02:37:56 AM »
Hi Manchester.

I don't see why you'd want to be overweight in the US. (By overweight I mean having more than the US's global share). If you were planning a move to the US then it could make sense.

VGLS 100 is a solid choice, going 100% into this is fine.

Oddly, if you like Vanguard funds, it looks cheaper to buy:

Vanguard FTSE Developed World ex-U.K. Equity Index Fund (ongoing fees of 0.15%)
Vanguard FTSE U.K. All Share Index Unit Trust (0.08%)

Than the global fund:

Vanguard FTSE Global All Cap Index Fund (0.24%)

or the LS100 fund (not exactly equivalent, but similar enough).

Buying the two separately also allows you to choose your own level of Home bias. (The UK's global share is around 6%, but you might want slightly more because UK growth is more likely to reflect your costs than global growth). If you want to minimise fees, and your platform doesn't charge for buying, that might be right for you.

sea_saw

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Re: Basic investment advice for UK beginners.
« Reply #51 on: March 13, 2018, 06:03:39 AM »
Oddly, if you like Vanguard funds, it looks cheaper to buy:

Vanguard FTSE Developed World ex-U.K. Equity Index Fund (ongoing fees of 0.15%)
Vanguard FTSE U.K. All Share Index Unit Trust (0.08%)

Than the global fund:

Vanguard FTSE Global All Cap Index Fund (0.24%)

I always assumed this was because the Developed World Ex-UK fund doesn't include developing countries or small cap companies. They tend to have higher fees from what I've observed, presumably due to having a greater percentage of smaller holdings (more info from more informed people very welcome). Whether you want to include them in your portfolio or not is of course an individual decision.

Manchester: buying more funds doesn't necessarily = more diversification, it depends what's in them. You can easily become less diversified by buying the same underlying things in three different funds, or accidentally skipping an area of the economy that you didn't mean to exclude.

The simplest way to go is to decide in advance what you want to invest in and why, and then buy the appropriate funds for that allocation. Maybe start with looking up what share each slice is of the global whole, and only adjust from there if you have reason to (e.g. to go bigger on the UK because you live here).

I've found the morningstar website useful for looking up funds and checking the geographic distribution, top holdings, and sizes of companies included in a fund. If you google the name, the morningstar page should be somewhere in the top results. There are also other similar factsheets on other websites.

never give up

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Re: Basic investment advice for UK beginners.
« Reply #52 on: March 13, 2018, 11:15:06 AM »
Yes I agree. Once splitting from a global fund that does it all, you would think an investor may want to have some small cap and certainly emerging markets included as the only reason to split is because of (a) small cost saving and (b) wanting to have some say in the geographical allocation. Both of these funds are then more expensive than the global fund but assume it would be cheaper overall due to the split. The global fund invests in nearly double the number of companies that the Developed World and UK funds invest in, so is more diversified.

I would probably recommend Manchester has only a single fund with the only decision being how much home bias to have. I.e. whether to go with VGLS100 or the Global fund.

Manchester

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Re: Basic investment advice for UK beginners.
« Reply #53 on: March 13, 2018, 11:22:33 AM »
Thanks for the feedback guys.  It helps so much having a group of people who happy to discuss this. 

I think I might go simpler and start with one fund, rather than three and the VGLS100 seems a good place to start!

ruffles

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Re: Basic investment advice for UK beginners.
« Reply #54 on: March 14, 2018, 03:50:31 AM »
I think I might go simpler and start with one fund, rather than three and the VGLS100 seems a good place to start!
If it's any help, all of the money in my S&S ISA is invested in Vanguard LS

Playing with Fire UK

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Re: Basic investment advice for UK beginners.
« Reply #55 on: March 14, 2018, 06:01:15 AM »
Oddly, if you like Vanguard funds, it looks cheaper to buy:

Vanguard FTSE Developed World ex-U.K. Equity Index Fund (ongoing fees of 0.15%)
Vanguard FTSE U.K. All Share Index Unit Trust (0.08%)

Than the global fund:

Vanguard FTSE Global All Cap Index Fund (0.24%)

I always assumed this was because the Developed World Ex-UK fund doesn't include developing countries or small cap companies. They tend to have higher fees from what I've observed, presumably due to having a greater percentage of smaller holdings (more info from more informed people very welcome). Whether you want to include them in your portfolio or not is of course an individual decision.


Genius! Yes, the global fund is 9% emerging markets and has 5k holdings. The Dev world ex-UK is around 2k holdings.

LS100 currently has 8% emerging markets - I recall this is a fairly new (and pleasing to me) addition.

shelivesthedream

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Re: Basic investment advice for UK beginners.
« Reply #56 on: March 14, 2018, 07:11:09 AM »
Thanks for the feedback guys.  It helps so much having a group of people who happy to discuss this. 

I think I might go simpler and start with one fund, rather than three and the VGLS100 seems a good place to start!

My generic advice is always start now with Vanguard LS100 or LS80. Like, right now. And then you can learn and tweak later, but you can't go too far wrong with that.

sea_saw

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Re: Basic investment advice for UK beginners.
« Reply #57 on: March 14, 2018, 08:43:24 AM »
Whew! Glad my back of the envelope understanding was reasonable.

For anyone who does like to tinker, there are a few websites you can use to model a portfolio of funds and analyse their underlying holdings/geographical allocation, compare to other portfolios, etc.

For example, here's one for Manchester's suggested portfolio. It came to almost 70% US (from all three funds), 7% UK (from LifeStrategy, which is about 24% UK), and small fractions of everything else (Developed World countries, which were in scope for both LS and dev-world-excl-UK, were slightly less squeezed than developing, which are only in LS).

It's a lot less effort than you might think, only took me a minute :)

You can compare this geographic breakdown to LS alone: https://www.trustnet.com/factsheets/o/acdv/vanguard-lifestrategy-100-equity-a-acc

Or Vanguard FTSE Global All Cap Index Fund
https://www.trustnet.com/factsheets/o/ngly/vanguard-ftse-global-all-cap-index-a-acc-gbp

But if instead of going 'ooh, fun!' you go 'what, no, wibble, backs away slowly', the answer is to do the simplest thing (LS, or global tracker) and not lose any sleep over it.

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Re: Basic investment advice for UK beginners.
« Reply #58 on: March 14, 2018, 10:43:52 AM »
That's an interesting tool sea_saw, thanks for posting. I know some people have mixed VGLS60 and 40 to provide a 50:50 AA for example and a tool like this would help understand before hand how this impacts the geographical split. Relevant for any fund combo obviously.

You're right its almost the litmus test for attitude to investing. Do you find this tool fun? No, great please invest in a global tracker or global fund of funds then and forget about it.

Rosielicious

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Re: Basic investment advice for UK beginners.
« Reply #59 on: September 05, 2018, 05:48:58 AM »
Just found this post in a link somewhere else on the site. It's been really useful because I've been wondering where I should be putting my money once I've finished building my emergency fund back up.

I already have a very small S&S ISA with Hargreaves Lansdowne, but before I put any more into it I'm going to read through that Monevator post to see which company is the best to use.