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Looking to start investing £3000 a month
King Lodos
Posted: 07 January 2018 20:35:20(UTC)
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Hargreaves Lansdown is probably the Rolls Royce of fund platforms .. Great service, great information, easy to use, but not the cheapest.

If you really want to save money, Vanguard's Stocks and Shares ISA is presumably the cheapest option:
https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa

The S&P500 is the go-to US stock market index .. You can buy the Vanguard US Stock Market index fund and basically get that.

Or you can buy the Vanguard Global Stock Index Fund, and get the US market plus the rest of the world (Europe, UK, Asia, etc.) .. The US happens to have performed the best recently, but long-term it tends to balance out, and if China were to become the global superpower, owning the Global index would ensure you owned that (and not *just* the US).

Familiarise yourself with how the stock market goes up and down, and stick to a plan.


An alternative option could be an ISA account with Fundsmith .. Their fund is active – so has a higher charge than Vanguard's – but it's a great strategy, and buys you some of the world's top companies

https://www.fundsmith.co.uk

The real key to investing is to put money in, then ignore it .. Know the worst case scenarios (like 60% losses), but just stick to putting money in and know it'll work out best in the long-term if you ignore it
2 users thanked King Lodos for this post.
dlp6666 on 08/01/2018(UTC), Stephen Garsed on 12/01/2018(UTC)
MikeT
Posted: 08 January 2018 00:55:29(UTC)
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A slightly different approach may be to honestly appraise how much you could tolerate seeing being wiped off your account balance before you would run for the exits crystallizing those losses.

Start with whatever that figure is in percentage terms and find an asset allocation model that has a historical worst case draw down to around this level.

You have now got a working figure for your equity/bond split.

Decide how you want to divide your equity portion; one option is to allocate according to size of individual stock markets. (I think HSBC do this accurately with their funds whereas Vanguard do not).

Decide how you want to divide your bond portion; one option is Vanguards Global Bond Index capturing 1000s of the available fixed income products. A more conservative option would be a UK Gov Bond Index which is probably more reflective of the historical asset return figures.

There are many other 'bolt-ons' that you could add as diversifiers; property, gold, hedge funds, infrastructure etc etc.

Once you have found your risk tolerance and consequently the right asset spit for you could do a lot worse than using the VLS, HSBC Global or L&G MI funds that match your needs.
john brace
Posted: 08 January 2018 09:33:03(UTC)
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As a complete amateur I am not inclined to invest in the Vanguard funds at present. correct me if wrong, but they are all trackers, albeit diversified, and have not been through a real downturn.
Surely buying now, at the top of the market, there is only one way to go.
After a market correction would be a better time; till then I would rather rely on the experts in a good UT or IT.
Mr Gold
Posted: 08 January 2018 09:37:07(UTC)
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I starting looking into the global stock index fund last night it does seem like something that would be good for me, im just not sure now how much to go in for. Thinking about 2k a month and that allows me to still keep 2k a month for gold. I am on a gold forum and the guys on there that are into stocks have or are thinking about cashing out because of all time highs they say, just want to get peoples opinions on a stocks forum on all time highs. Does it make you think about cashing out or does all time highs not really matter ?
King Lodos
Posted: 08 January 2018 09:59:07(UTC)
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john brace;55125 wrote:
As a complete amateur I am not inclined to invest in the Vanguard funds at present. correct me if wrong, but they are all trackers, albeit diversified, and have not been through a real downturn.
Surely buying now, at the top of the market, there is only one way to go.
After a market correction would be a better time; till then I would rather rely on the experts in a good UT or IT.

Mr Gold;55126 wrote:
I starting looking into the global stock index fund last night it does seem like something that would be good for me, im just not sure now how much to go in for. Thinking about 2k a month and that allows me to still keep 2k a month for gold. I am on a gold forum and the guys on there that are into stocks have or are thinking about cashing out because of all time highs they say, just want to get peoples opinions on a stocks forum on all time highs. Does it make you think about cashing out or does all time highs not really matter ?


To answer both, look at this chart of long-term market returns:

http://www.econlib.org/library/Enc/art/lfHendersonCEE2_figure_041.jpg

Now how many points would the stock market have been at an "all-time high" over the past 200 years?

Of course stocks wobble in the short-term – which makes "all-time highs" seem volatile and unpredictable .. But long-term, "all-time highs" are the norm .. People who sell whenever there's an "all-time high" would never get wealthy in stocks – they're gamblers by nature; and not good gamblers, and certainly not investors.

(Bear in mind this is total returns – so it's the stock market + dividends.)

Also look at gold .. Gold is a great 'hedge' .. When bad things happen to stocks, gold may come to the rescue – as it did in the 70s .. So it may be worth holding 5-10% in gold .. But gold is not an investment .. It doesn't produce anything; and at best keeps up with inflation .. $1 invested in gold 200 years ago would be worth $19 today .. It would be $8.8 million in stocks.


Re: risk in stocks

The best way to think of it is that it's *always* there .. Stocks don't get riskier as they go higher – for the most part, they're priced exactly where they should be .. So what makes stocks crash is something we don't see coming .. And every year, just say there's a 1 in 20 chance that thing happens .. Chinese debt crisis, war, etc. This is called a risk premium, and is why stocks (or any investment) pay you for holding them
7 users thanked King Lodos for this post.
Slacker on 08/01/2018(UTC), Keith Cobby on 08/01/2018(UTC), Tim D on 08/01/2018(UTC), john brace on 08/01/2018(UTC), Luca Brasi on 08/01/2018(UTC), dlp6666 on 08/01/2018(UTC), Harry Trout on 09/01/2018(UTC)
Mr Gold
Posted: 08 January 2018 10:13:10(UTC)
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Im on the vanguard website the now and struggling to find the global stock index fund i can see a global bond index fund but not the stock version. I dont know if im looking in the wrong place ?
King Lodos
Posted: 08 January 2018 10:24:27(UTC)
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3 users thanked King Lodos for this post.
Tim D on 08/01/2018(UTC), Slacker on 08/01/2018(UTC), dlp6666 on 08/01/2018(UTC)
Mr Gold
Posted: 08 January 2018 10:33:26(UTC)
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Also just wanted to ask would you say these are a better bet than a s and p 500 ? Reason i ask is cause a person i follow on social media thats into stocks says a new person going into stocks should probably look at the sp500 but that guy is American so im guessing thats a better option if your American? And UK people go the other route for a safer option.
Catch The Pigeon
Posted: 08 January 2018 10:42:11(UTC)
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john brace;55125 wrote:
As a complete amateur I am not inclined to invest in the Vanguard funds at present. correct me if wrong, but they are all trackers, albeit diversified, and have not been through a real downturn.
Surely buying now, at the top of the market, there is only one way to go.
After a market correction would be a better time; till then I would rather rely on the experts in a good UT or IT.


How do you know when you are at the top? Long term investors should not be concerned by entry points into the market. In 20+ years time, it will make very little difference.
2 users thanked Catch The Pigeon for this post.
Keith Cobby on 08/01/2018(UTC), dlp6666 on 08/01/2018(UTC)
King Lodos
Posted: 08 January 2018 10:47:03(UTC)
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Mr Gold;55130 wrote:
Also just wanted to ask would you say these are a better bet than a s and p 500 ? Reason i ask is cause a person i follow on social media thats into stocks says a new person going into stocks should probably look at the sp500 but that guy is American so im guessing thats a better option if your American? And UK people go the other route for a safer option.


It's impossible to say which will do better, but they are slightly different bets.

The S&P500 is basically just the US Stock Market .. The FTSE World is 50% the US Market, and 50% the rest of the world .. So your top 10 positions (Apple, Microsoft, Berkshire Hathaway, etc.) are largely the same, and performance will be very similar.

The only difference is the World is a more diversified bet .. If the US hit a rough patch over the next 20 years, and China accelerated, you'd regret being all-in on the US and missing everything happening in Asia .. So it's a broader bet, and the advantage of index funds is they always adapt to what's happening in the world – so if China grows, you'll own more China .. But also, as you learn about the market, you might choose to own more individual stocks and funds .. A World index is basically a neutral bet
Mr Helpful
Posted: 08 January 2018 12:08:13(UTC)
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King Lodos;55127 wrote:

Re: risk in stocks
The best way to think of it is that it's *always* there .. Stocks don't get riskier as they go higher – for the most part, they're priced exactly where they should be .. So what makes stocks crash is something we don't see coming .. And every year, just say there's a 1 in 20 chance that thing happens .. Chinese debt crisis, war, etc. This is called a risk premium, and is why stocks (or any investment) pay you for holding them


A definition of 'risk' would be useful at this point.
Mr Helpful
Posted: 08 January 2018 12:15:52(UTC)
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Catch The Pigeon;55131 wrote:
john brace;55125 wrote:
As a complete amateur I am not inclined to invest in the Vanguard funds at present. correct me if wrong, but they are all trackers, albeit diversified, and have not been through a real downturn.
Surely buying now, at the top of the market, there is only one way to go.
After a market correction would be a better time; till then I would rather rely on the experts in a good UT or IT.


How do you know when you are at the top? Long term investors should not be concerned by entry points into the market. In 20+ years time, it will make very little difference.


Lovely those semi-log charts, the only trouble is that they are semi-log, so life-changing drawdowns such as 1929 80%ish drawdown appear as slight wobbles in the relentless ever upwards trajectory. A typical 50%ish drawdown today would also appear as a slender blip.
A good read is Benjamin's Roth 'The Great Depression, a Diary', esp for those beginning to ponder 100% Stocks.
Very much not anti-Stocks, the best hope of the long-term growth, just a reminder about moderation and an awareness of valuations (as opposed to merely noting 'all-time highs').
1 user thanked Mr Helpful for this post.
Mickey on 08/01/2018(UTC)
King Lodos
Posted: 08 January 2018 12:31:01(UTC)
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I'd define risk as the chance of an irrecoverable loss of capital from an asset.

So if you take a bond you're going to hold to maturity, you can get anything from a 1% to a 50% yield, and what that's balanced against is the chance of the bond defaulting (risk).

Bonds are the yardstick for stock valuations, so we extrapolate that view of risk to stocks – with the chance of a company failing, or an irrecoverable price decline .. Across markets I think risk gets harder to define – as irrecoverable declines are less an issue, but volatility might be .. I'd probably define it as: the chance of having less capital in 5, 10, 15 years time – and the indeterminate nature of investor time-scales ensuring markets are never able to reach a stable/efficient state
1 user thanked King Lodos for this post.
Mr Helpful on 08/01/2018(UTC)
King Lodos
Posted: 08 January 2018 12:45:03(UTC)
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Mr Helpful;55136 wrote:
Lovely those semi-log charts, the only trouble is that they are semi-log, so life-changing drawdowns such as 1929 80%ish drawdown appear as slight wobbles in the relentless ever upwards trajectory. A typical 50%ish drawdown today would also appear as a slender blip.
A good read is Benjamin's Roth 'The Great Depression, a Diary', esp for those beginning to ponder 100% Stocks.
Very much not anti-Stocks, the best hope of the long-term growth, just a reminder about moderation and an awareness of valuations (as opposed to merely noting 'all-time highs').


It's partly psychological with me, but I cannot stand even a 1% loss across my portfolio – by then I'm normally half out the market.

But what the log view demonstrates is still the nature of wealth creation .. By staying in the market, decade after decade, you do compound returns that mean at some point you've got 20x more capital than you started with, and even at the bottom of an 80% drop, you're still many orders wealthier than you were, with a generational buying opportunity to boot.

So you're moving up that log scale just by staying in the market .. and of course the secret is you're moving up it a lot faster and steeper with full market exposure than with half .. I'm still too focused on cash – it's a neurotic trait .. I've often said my dream portfolio would be 6 great companies, with enough pouring in in dividends that I didn't need to worry about capital (and with great companies, >50% losses become MUCH less likely)
2 users thanked King Lodos for this post.
Keith Cobby on 08/01/2018(UTC), dlp6666 on 08/01/2018(UTC)
Keith Cobby
Posted: 08 January 2018 13:06:04(UTC)
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I have been 100% invested through the drops of 1987, 2000, 2007. Most people in the UK don't want to lose any money (who does!) and their cash sits in bank deposits and national savings. But with no end in sight to financial repression and with interest rates at their lowest ever, lower even than during the much darker days of WW2, governments and central banks are stealing this money. Therefore over the long term the only way to grow your wealth is through equities. A small selection of carefully managed funds has been the way forward for me.
6 users thanked Keith Cobby for this post.
King Lodos on 08/01/2018(UTC), Luca Brasi on 08/01/2018(UTC), Mickey on 08/01/2018(UTC), Mr Helpful on 08/01/2018(UTC), dlp6666 on 08/01/2018(UTC), gillyann on 10/02/2018(UTC)
King Lodos
Posted: 08 January 2018 13:17:50(UTC)
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Good chart on Buffett's net worth to show the power of compounding:

https://ei.marketwatch.com/Multimedia/2015/08/17/Photos/NS/MW-DS354_downlo_20150817130202_NS.png

You could make the case that attack is the best form of defence .. I'd always want some cash (as Buffett says: to help you sleep at night, and to take advantage of any opportunities the market throws up)
2 users thanked King Lodos for this post.
Keith Cobby on 08/01/2018(UTC), dlp6666 on 08/01/2018(UTC)
Mr Gold
Posted: 11 January 2018 17:32:29(UTC)
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King Lodos;55142 wrote:
Good chart on Buffett's net worth to show the power of compounding:

https://ei.marketwatch.com/Multimedia/2015/08/17/Photos/NS/MW-DS354_downlo_20150817130202_NS.png

You could make the case that attack is the best form of defence .. I'd always want some cash (as Buffett says: to help you sleep at night, and to take advantage of any opportunities the market throws up)


Been watching a few more videos trying to learn more, seen a few different people go on about the 1000 investment for 22 years gets you 1 million but is 10% gains with these index funds really realistic every year ?
King Lodos
Posted: 11 January 2018 17:55:45(UTC)
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Mr Gold;55277 wrote:
Been watching a few more videos trying to learn more, seen a few different people go on about the 1000 investment for 22 years gets you 1 million but is 10% gains with these index funds really realistic every year ?


Putting in $1,000 a year at 10% over 22 years? Yep, that would do it.

If we take off 3% for inflation, it would get you to $633,000 .. So that would be assuming a 7% real return – which is the S&P 500's post-war long-term average.

There are no guarantees .. You can have very bad 10-20 year periods, but putting money in regularly (and not touching it) reduces the impact of bad periods. (If you can avoid all the mistakes people make, like second-guessing the market and pulling money in and out, you should do fine.)

Valuations can give you a good idea of likely returns from here .. Right now markets are expensive, so you should expect about 4% returns from $1,000 invested in the S&P or FTSE World today, over the next 10-15 years – but how it gets there is anyone's guess .. The key is 4% is about the best you'll get anywhere (somewhat reliably) at the moment, so you should invest in stocks.

99% of how well you do will come down to not making behavioural mistakes .. Not trying to time to market, investing when everyone says "stocks are over – get out!" .. One of the best investments early on is reading .. Read as much as possible, then invest as simply as possible



Bellabeck
Posted: 12 January 2018 09:34:27(UTC)
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Read Lars Kroijer Investing Demystiufied and the website Monevator for a passive strategy. I use index funds as core strategy then add in some ITs for themes and a semi active 'play'...
1 user thanked Bellabeck for this post.
Tim D on 12/01/2018(UTC)
Mr Gold
Posted: 10 February 2018 10:26:15(UTC)
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King Lodos;55278 wrote:
Mr Gold;55277 wrote:
Been watching a few more videos trying to learn more, seen a few different people go on about the 1000 investment for 22 years gets you 1 million but is 10% gains with these index funds really realistic every year ?


Putting in $1,000 a year at 10% over 22 years? Yep, that would do it.

If we take off 3% for inflation, it would get you to $633,000 .. So that would be assuming a 7% real return – which is the S&P 500's post-war long-term average.

There are no guarantees .. You can have very bad 10-20 year periods, but putting money in regularly (and not touching it) reduces the impact of bad periods. (If you can avoid all the mistakes people make, like second-guessing the market and pulling money in and out, you should do fine.)

Valuations can give you a good idea of likely returns from here .. Right now markets are expensive, so you should expect about 4% returns from $1,000 invested in the S&P or FTSE World today, over the next 10-15 years – but how it gets there is anyone's guess .. The key is 4% is about the best you'll get anywhere (somewhat reliably) at the moment, so you should invest in stocks.

99% of how well you do will come down to not making behavioural mistakes .. Not trying to time to market, investing when everyone says "stocks are over – get out!" .. One of the best investments early on is reading .. Read as much as possible, then invest as simply as possible





Looking for more advice please, definitely looking to get into stocks at the end of this month. Looking at setting up two index funds one in my name and one in my wifes. I am 36 shes 32 so i plan to put £1000 a month in each and cash mine out in 24 years time when i hit 60 and only cash my wifes put when and if we ever need it.

Just still unsure of what index funds to go for, i recently came across a YouTube video the guy was American so not sure if its a little different in the UK but he was talking about a roth ira and how its tax free and you cant access it until your 59 1/2 that sounded pretty good tax free. So what would be the uk equivalent? Also should i have the same index fund for my wife or is that not recommended, should i have two different types ?
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