Vanguard - Index invesetment

RaymondLin

Recently looking at doing something more with my money than just spending it, did my initial surface research and came across Vanguard as a "safe" alternative to ISA with a better rate of returns.  Has anyone got any experience into this and what are your tips and thoughts on either Vanguard or similarily run methods for investments?

p.s. not looking for a quick buck but a retirement fund, started with £500 just now with a target retirement date.

stickyfiddle

It's a good platform. I'm not using it myself as the benefits aren't the same for non-UK residents, but we're weighing up between that and manually investing in a bunch of index trackers. 

mbe

We've been saving money in peer-to-peer lending accounts.

Been with Ratesetter for a couple of years now earning 3%+ with instant access, more if it is deposited for 1 year or 5. Company holds a large Fund to cover any defaults.

mbe

We used to invest in the stock market when you could buy and sell in the rising market. Market has been falling of late so one would have to speculate on a recovery.

Gold bullion is on the up, with market and currecy uncertainty it's always a safe haven although it's really long term. Atkinsons sell bullion coins cheaper than Royal Mint and Bullion by Post.

spark240

Im sticking with Old Mutual Wealth for now, medium / high risk stocks and shares, averaged 5-7% over the last 5 years.

RaymondLin

mbe said:

We've been saving money in peer-to-peer lending accounts.

Been with Ratesetter for a couple of years now earning 3%+ with instant access, more if it is deposited for 1 year or 5. Company holds a large Fund to cover any defaults.

I've looked into this but it seems the rate of return isn't as strong as an index fund, however you are right that it does have an advantage of instant access.

thomasross20

I invested in 100% acc lifestrategy and it did well in a rising market but the market isn't rising... 

quarky

Vanguard are highly regarded. I would invest via a S&S ISA, and make regular payments. Vanguard also have funds covering different regions from memory (or other funds do), so you might want to consider a spread. With £500, it doesn't make a huge difference at this point, but in a few years, you might want to consider (for example)
50% in a US fund
20% in a UK fund
20% in an Asian fund
10% in a "risky" fund

You will find that different funds grow/shrink at different rates, but balancing them out on an annual basis, you will limit your falls, and make your gains a bit more concrete when one fund/region does unusually well. 

Also, don't panic when stocks fall. You are in for the long haul, so even if it drops 10% YOY, it will go back up again.

Snap

Tbh, all these are the same thing in different wrappers. Managed funds. The key is to select one that has done consistently well over a number of years. Old Mutual do good funds. One of the most successful over the last (many yeas) has been the Lindsell Train GLobal Equity fund.

Market rising or dropping - the main aim of a fund is to out perform the market and anyone else. They do it by the quality of decisions.

Get on an investment site, like Hargreaves Lansdown and do some research into the best performing funds over at least 5 years. Pick a few, spread your investment, put a few quid in each month. They will do the rest.

ThePrettyDamned

A piece of advice I was given (as ever, I'm no expert but am looking to open a stocks and shares isa and drip feed it as I already contribute well to my pension) was to check charges with a fine tooth comb (there can be several charges) and to drip feed - this means that, should shares go down in price, your money buys more, then you have more shares once the price begins to rise again.

The main take home I was given is that it is a long game - it's better to pay off debts (mortgage excepted, although this can also be a good idea to clear early and will potentially save thousands) and and ensure you don't leave yourself short. Maximise isa allowance for tax efficiency.

Again,not an expert - after discussing at some length, I knew I wanted to do it but not yet as I don't have the disposable income for it and it was smarter to increase pension contribution instead. 

Snap

Debts vs investments - depends on the interest rates and the return. E.g a mortgage at 1.5% isn't worth paying off IMO as you should be able to make at least double that return, if not three or four times it, in a good investment.

If you have 100k in a mortgage at 1.5%, leave it, and put the money you'd repay it off with into an investment that will get you more than that in a return.

However, a debt at 5% interest is worth paying off.

stickyfiddle

If you’re looking for long term returns Indexes are where it’s at. It’s lovely trying to identify funds that have done well historically, but that doesn’t guarantee future performance.

Most funds fail to beat most indexes most of the time.

Lodious

My personal experience with an approach similar to Quarky's has not been a particularly happy one. I went for a spread of HL 'Wealth 150' funds as safe bets, and they have almost without exception performed really badly. The only things which have done well have been the more random choices which I tried for a bit of personal interest. Maybe in the longer term they will do better, but 5 years in, I have to say, I think the only people doing well are the fund managers and HL. I'm not disagreeing with Quarky's advice (I probably agree with it), I'm just saying from my experience, it's not worked out well, and I think there is a lot worse to come in the pipeline. 

As for historic performance, check out Neil Woodford. He's a guy changing the face of investing (not in a good way). He was shitting cash for decades and has done appallingly in recent years. He is fuelling a move for more and more people to drop the active funds and go for trackers. 

Personally, until the next correction, I'd choose to pay off debts way before investing as it keeps your finances simple and is no risk steady progress.

ToneControl

There's a lot of people expecting the stock market (and ISAs) to drop by 30%, even 50% in the next year or two

I'm keeping my investments in cash funds for now

I lost 50% of my pension fund in the last crash, so this isn't as unlikely as people think

RaymondLin

ToneControl said:

There's a lot of people expecting the stock market (and ISAs) to drop by 30%, even 50% in the next year or two

I'm keeping my investments in cash funds for now

I lost 50% of my pension fund in the last crash, so this isn't as unlikely as people think

Ouch, has it recovered to before the crash since? 

Grumpyrocker

I've got a modest ISA with Vanguard. It's not exactly doing great right now thanks to Trump and Brexit.

But such things don't last forever and I'm in this for the long game so I'm staying put. 

RaymondLin

I am doing both the "getting rid of debts ASAP" and saving at the same time.

At the moment I have most things one would want, all the guitars, amps and pedals; a car i own outright; all 3 consoles on the market with games over 100 games in my library, I travel a few times a year and still have some money left over.  My mortgage will be paid off in around 7 years, there is a small balance on my credit card but at 0% so going to spread that repayment over it's 0% terms and put remainder funds into investments.  It would stop me seeing that I have money in my account even if it's an ISA account and will stop me spending it.  I have a bad tendency to buy things on impulse and I realise it is best to put my money away to a place that I can't touch for the sake of me.

ThePrettyDamned

ToneControl said:

There's a lot of people expecting the stock market (and ISAs) to drop by 30%, even 50% in the next year or two

I'm keeping my investments in cash funds for now

I lost 50% of my pension fund in the last crash, so this isn't as unlikely as people think

Ouch  that's pretty nasty  

How do you account for the fact that that can happen? For example  long term you can probably ride it out but if you were nearing retirement and that happened it would be crushing.

Lodious

ThePrettyDamned said:

ToneControl said:

There's a lot of people expecting the stock market (and ISAs) to drop by 30%, even 50% in the next year or two

I'm keeping my investments in cash funds for now

I lost 50% of my pension fund in the last crash, so this isn't as unlikely as people think

Ouch  that's pretty nasty  

How do you account for the fact that that can happen? For example  long term you can probably ride it out but if you were nearing retirement and that happened it would be crushing.

The usual approach it to start shifting stuff into cash or bonds as you approach retirement. If you look at the FSTE over time, it gives you a feel for how long it takes to recover (typically 4-6 years).  

stickyfiddle

ThePrettyDamned said:

ToneControl said:

There's a lot of people expecting the stock market (and ISAs) to drop by 30%, even 50% in the next year or two

I'm keeping my investments in cash funds for now

I lost 50% of my pension fund in the last crash, so this isn't as unlikely as people think

Ouch  that's pretty nasty  

How do you account for the fact that that can happen? For example  long term you can probably ride it out but if you were nearing retirement and that happened it would be crushing.

If you aren’t planning on cashing out in the next 5 years, you celebrate and buy more because the market will rise again and you canwill buy cheap right now. 

If you want to access that money in the next 5-10 years it should be in potentially volatile stocks & funds but moved towards bonds and gilts. Lower returns but much less likely to fall over 

Rickyd

We use a blend of Vanguard and Dimensional "passive" funds in the portfolios we manage. Very few "active" fund managers outperform their sectors and charge you hefty fees to share in their disappointing performance. If you don't want to be worrying about performance every 5 minutes try the Vanguard LifeStrategy funds. You can have equity content ranging from 20% to 100% and the fund charge is 0.22%. They will give you full diversification of asset classes and geographic areas. It's the charges fund providers make that will have the greatest impact on performance over the long term. Remember, you won't make a profit every year, markets go down as well as up.