£200pm investment, 20 years. Whats the best investment?
Discussion
trowelhead said:
But if your IFA charges c. 1% of assets held, and you can construct a portfolio for less than 0.5% (with a little time spent reading - or paying an IFA a one time fee) then you stand to save :
With IFA at 1% fees p/a - £10k portfolio, average returns of 8% pa - total charges of £15214 over 25 years
Self Managed at 0.5% fees p/a - £10k portfolio, average returns of 8% pa - total charges of £8028 over 25 years
Scale that up to a £100k or £200k portfolio and you can see why low fees are very important in keeping your returns.
(plus - don't IFAs charge c. 1% of assets held per year and then still charge fund fees ontop?)
IFA's can't charge FBRC anymore can they?With IFA at 1% fees p/a - £10k portfolio, average returns of 8% pa - total charges of £15214 over 25 years
Self Managed at 0.5% fees p/a - £10k portfolio, average returns of 8% pa - total charges of £8028 over 25 years
Scale that up to a £100k or £200k portfolio and you can see why low fees are very important in keeping your returns.
(plus - don't IFAs charge c. 1% of assets held per year and then still charge fund fees ontop?)
IFA fees are paid for financial advice
Fund management fees are paid for fund management.
They are entirely separate and paid to separate people for separate things.
trowelhead said:
With IFA at 1% fees p/a - £10k portfolio, average returns of 8% pa - total charges of £15214 over 25 years
Self Managed at 0.5% fees p/a - £10k portfolio, average returns of 8% pa - total charges of £8028 over 25 years
That's assuming I can choose/manage/switch funds as well as he can. The intention, or perhaps theory, is that he can at least cover his own fees in improved performance, and also take profits/manage the tax aspect etc.Self Managed at 0.5% fees p/a - £10k portfolio, average returns of 8% pa - total charges of £8028 over 25 years
And yes, it seems they can charge twice - once for making recommendations and again for investing it, though it's up to them.
Simpo Two said:
That's assuming I can choose/manage/switch funds as well as he can. The intention, or perhaps theory, is that he can at least cover his own fees in improved performance, and also take profits/manage the tax aspect etc.
And yes, it seems they can charge twice - once for making recommendations and again for investing it, though it's up to them.
Personally I think it's worth paying an IFA for advice about financial services and in particular the types of product available. An IFA can also provide good advice as to what sort of funds you should invest in, given your risk appetite / return objectives etc.And yes, it seems they can charge twice - once for making recommendations and again for investing it, though it's up to them.
I'm less inclined to believe that an IFA can (or should) try and call the market (although can of course provide performance history to help an investor decide between different funds etc).
Thanks again for all the replies everyone, I'll be going through them all with a fine too comb of confusion next week.
Vanguard looks interesting.
I did have IfA advice, as my original post. But it turned out to be a bit s
t. I can also be st and it won't cost me a penny. Haha. But hopefully the collective wisdom of PH can steer me higher than the brown stuff 
Vanguard looks interesting.
I did have IfA advice, as my original post. But it turned out to be a bit s
t. I can also be st and it won't cost me a penny. Haha. But hopefully the collective wisdom of PH can steer me higher than the brown stuff Paul O said:
Thanks again for all the replies everyone, I'll be going through them all with a fine too comb of confusion next week.
Vanguard looks interesting.
I did have IfA advice, as my original post. But it turned out to be a bit st. I can also be st and it won't cost me a penny. Haha. But hopefully the collective wisdom of PH can steer me higher than the brown stuff
Just because your previous portfolio only earned 0.3% over the period, does not necessarly mean that the advice you received was poor! Vanguard looks interesting.
I did have IfA advice, as my original post. But it turned out to be a bit s
t. I can also be st and it won't cost me a penny. Haha. But hopefully the collective wisdom of PH can steer me higher than the brown stuff Walm,
Thanks - a couple of points that I took into account. Firstly, my stockbroking days, are (thankfully) long behind me. That rustiness may have caused your comment about my 'nonsense' approach.
In respect of calculating EPS, 'Headline', 'Cash', 'GAAP', 'Ongoing', 'Pro-forma' are all various ways of calculating EPS. By advocating that you "should" exclude various costs I'm assuming you're using Pro-forma EPS - the favourite of the investment sector. Nowadays, lots of companies do ignore one off expenses, if you believe it does or doesn't skew value and worth, that's an individual call.
Astra has invested very heavily in immuno-oncology (you exclude those costs I think), which begs the question.. either management does or doesn't know what it's doing (I doubt that), or is trying to smooth EPS.. in much the same way that 'with profits funds 'smoothed' returns. It's up to us to either take the headline figures at face value (horses for courses, and that's fine) or dig deeper.
It claims to be on course to increase sales by 75% in 7 years, its research ('its', admittedly) places a lot of that pressure on one i-o drug in particular, MEDI4736. That *seems* to be floundering - certainly against the likes of Merck, Roche etc. Whether you're a buyer or a seller will depend on your position (you say tomato, etc). Either way, you'd be mad to trust the numbers at face value and simply rely on them. I happily concede though, you might know more about the company than me - my reference in general was aimed at the larger picture and remains (in my warped mind at least!) a good instinct to remain with.
Carlos,
I hear what you're saying, and at face value, you're right. But look at the weighting of the FTSE, compare that to the market capitalisation and see where the bias is. That sums up for me, why *excessive* exposure to the FTSE might not be the best thing right now. Firstly, it is just a market capitalisation and secondly, the bias within the FTSE isn't healthy.
Did you see that rip off of Chinese Freelander the other week? A shocker! Similarly, companies within the FTSE100 are not all the same, but they appear to be because they are all lumped together under the same banner and because it seems to be the economic indicator that we all listen out for. Me included lol.
But some companies in there are better than others because their space is more resilient; some industries remain resilient no matter what the macro throws at them (always invest in toilet paper manufacturers!). Some industries wither under the weight of a strong headwind though - and it is that which predicated my thinking in respect of the FTSE and the forthcoming election. Jeff Prestridge has done a good piece in today's (whisper it quietly) Mail on Sunday too. That's worth a read if you're parked in cash with a view to becoming a buy to let magnate.
The market capitalisation of all the companies within the FTSE 100 is what, £2,000 billions? The cyclical stocks within that account for about half of because they're great to hold - everyone's looking for yield right now. But it's still a large skew and already, we're seeing that the market is valuing ahead for the next phase of the economic cycle. Last week, we read that things are slowing down a little - and the market has already taken that onboard.
A lot will depend on a client's perspective, needs, wishes and feelings etc. But a heavy weighting in the FTSE might be good for client 'A', but an absolute shocker for client 'B'. My position is that I want to reflect steady, low alpha growth so I'm trying to ignore an urge towards cyclicals. There is a LOT of dogma about passive investments going around, and nearly all of it incredibly well founded. I love passives, but not prescriptively so - it's at particular times like this, I'm pleased I retain a weight of active managers who can sniff out income and bolster capital growth with yield.
Simpo,
What's the aphorism, a lawyer who represents himself has a fool as a client? Objectivity and perspective are vital - I have an IFA who I trust keep an eye on my affairs. And I do her. Not in the biblical sense of course. But we bounce ideas off each other for sure. Sometimes you get too close to your own decisions and become subjective; we're all only human. She even had to nag me about doing my ISA - time for another aphorism.. the window cleaner usually has the dirtiest windows!
Time to strip some floors. Have a good bank holiday everyone.
Thanks - a couple of points that I took into account. Firstly, my stockbroking days, are (thankfully) long behind me. That rustiness may have caused your comment about my 'nonsense' approach.
In respect of calculating EPS, 'Headline', 'Cash', 'GAAP', 'Ongoing', 'Pro-forma' are all various ways of calculating EPS. By advocating that you "should" exclude various costs I'm assuming you're using Pro-forma EPS - the favourite of the investment sector. Nowadays, lots of companies do ignore one off expenses, if you believe it does or doesn't skew value and worth, that's an individual call.
Astra has invested very heavily in immuno-oncology (you exclude those costs I think), which begs the question.. either management does or doesn't know what it's doing (I doubt that), or is trying to smooth EPS.. in much the same way that 'with profits funds 'smoothed' returns. It's up to us to either take the headline figures at face value (horses for courses, and that's fine) or dig deeper.
It claims to be on course to increase sales by 75% in 7 years, its research ('its', admittedly) places a lot of that pressure on one i-o drug in particular, MEDI4736. That *seems* to be floundering - certainly against the likes of Merck, Roche etc. Whether you're a buyer or a seller will depend on your position (you say tomato, etc). Either way, you'd be mad to trust the numbers at face value and simply rely on them. I happily concede though, you might know more about the company than me - my reference in general was aimed at the larger picture and remains (in my warped mind at least!) a good instinct to remain with.
Carlos,
I hear what you're saying, and at face value, you're right. But look at the weighting of the FTSE, compare that to the market capitalisation and see where the bias is. That sums up for me, why *excessive* exposure to the FTSE might not be the best thing right now. Firstly, it is just a market capitalisation and secondly, the bias within the FTSE isn't healthy.
Did you see that rip off of Chinese Freelander the other week? A shocker! Similarly, companies within the FTSE100 are not all the same, but they appear to be because they are all lumped together under the same banner and because it seems to be the economic indicator that we all listen out for. Me included lol.
But some companies in there are better than others because their space is more resilient; some industries remain resilient no matter what the macro throws at them (always invest in toilet paper manufacturers!). Some industries wither under the weight of a strong headwind though - and it is that which predicated my thinking in respect of the FTSE and the forthcoming election. Jeff Prestridge has done a good piece in today's (whisper it quietly) Mail on Sunday too. That's worth a read if you're parked in cash with a view to becoming a buy to let magnate.
The market capitalisation of all the companies within the FTSE 100 is what, £2,000 billions? The cyclical stocks within that account for about half of because they're great to hold - everyone's looking for yield right now. But it's still a large skew and already, we're seeing that the market is valuing ahead for the next phase of the economic cycle. Last week, we read that things are slowing down a little - and the market has already taken that onboard.
A lot will depend on a client's perspective, needs, wishes and feelings etc. But a heavy weighting in the FTSE might be good for client 'A', but an absolute shocker for client 'B'. My position is that I want to reflect steady, low alpha growth so I'm trying to ignore an urge towards cyclicals. There is a LOT of dogma about passive investments going around, and nearly all of it incredibly well founded. I love passives, but not prescriptively so - it's at particular times like this, I'm pleased I retain a weight of active managers who can sniff out income and bolster capital growth with yield.
Simpo,
What's the aphorism, a lawyer who represents himself has a fool as a client? Objectivity and perspective are vital - I have an IFA who I trust keep an eye on my affairs. And I do her. Not in the biblical sense of course. But we bounce ideas off each other for sure. Sometimes you get too close to your own decisions and become subjective; we're all only human. She even had to nag me about doing my ISA - time for another aphorism.. the window cleaner usually has the dirtiest windows!
Time to strip some floors. Have a good bank holiday everyone.
Ginge R said:
Walm,
Carlos,
I hear what you're saying, and at face value, you're right. But look at the weighting of the FTSE, compare that to the market capitalisation and see where the bias is. That sums up for me, why *excessive* exposure to the FTSE might not be the best thing right now. Firstly, it is just a market capitalisation and secondly, the bias within the FTSE isn't healthy.
Did you see that rip off of Chinese Freelander the other week? A shocker! Similarly, companies within the FTSE100 are not all the same, but they appear to be because they are all lumped together under the same banner and because it seems to be the economic indicator that we all listen out for. Me included lol.
But some companies in there are better than others because their space is more resilient; some industries remain resilient no matter what the macro throws at them (always invest in toilet paper manufacturers!). Some industries wither under the weight of a strong headwind though - and it is that which predicated my thinking in respect of the FTSE and the forthcoming election. Jeff Prestridge has done a good piece in today's (whisper it quietly) Mail on Sunday too. That's worth a read if you're parked in cash with a view to becoming a buy to let magnate.
The market capitalisation of all the companies within the FTSE 100 is what, £2,000 billions? The cyclical stocks within that account for about half of because they're great to hold - everyone's looking for yield right now. But it's still a large skew and already, we're seeing that the market is valuing ahead for the next phase of the economic cycle. Last week, we read that things are slowing down a little - and the market has already taken that onboard.
A lot will depend on a client's perspective, needs, wishes and feelings etc. But a heavy weighting in the FTSE might be good for client 'A', but an absolute shocker for client 'B'. My position is that I want to reflect steady, low alpha growth so I'm trying to ignore an urge towards cyclicals. There is a LOT of dogma about passive investments going around, and nearly all of it incredibly well founded. I love passives, but not prescriptively so - it's at particular times like this, I'm pleased I retain a weight of active managers who can sniff out income and bolster capital growth with yield.
Sorry, but I don't understand what you're trying to say with the above, but it appears that you don't understand what diversification is.Carlos,
I hear what you're saying, and at face value, you're right. But look at the weighting of the FTSE, compare that to the market capitalisation and see where the bias is. That sums up for me, why *excessive* exposure to the FTSE might not be the best thing right now. Firstly, it is just a market capitalisation and secondly, the bias within the FTSE isn't healthy.
Did you see that rip off of Chinese Freelander the other week? A shocker! Similarly, companies within the FTSE100 are not all the same, but they appear to be because they are all lumped together under the same banner and because it seems to be the economic indicator that we all listen out for. Me included lol.
But some companies in there are better than others because their space is more resilient; some industries remain resilient no matter what the macro throws at them (always invest in toilet paper manufacturers!). Some industries wither under the weight of a strong headwind though - and it is that which predicated my thinking in respect of the FTSE and the forthcoming election. Jeff Prestridge has done a good piece in today's (whisper it quietly) Mail on Sunday too. That's worth a read if you're parked in cash with a view to becoming a buy to let magnate.
The market capitalisation of all the companies within the FTSE 100 is what, £2,000 billions? The cyclical stocks within that account for about half of because they're great to hold - everyone's looking for yield right now. But it's still a large skew and already, we're seeing that the market is valuing ahead for the next phase of the economic cycle. Last week, we read that things are slowing down a little - and the market has already taken that onboard.
A lot will depend on a client's perspective, needs, wishes and feelings etc. But a heavy weighting in the FTSE might be good for client 'A', but an absolute shocker for client 'B'. My position is that I want to reflect steady, low alpha growth so I'm trying to ignore an urge towards cyclicals. There is a LOT of dogma about passive investments going around, and nearly all of it incredibly well founded. I love passives, but not prescriptively so - it's at particular times like this, I'm pleased I retain a weight of active managers who can sniff out income and bolster capital growth with yield.
The FTSE 100 is like a tin of jelly beans. They might all be different colours, but they're still jelly beans. If all you want to live on is jelly beans - fine. And even if you do want to live just on jelly beans you'll still get fed up with the same colour after a while. Trouble is, there aren't even 100 different colours either.
CarlosFandango11 said:
The FTSE100 is diversified.
Yes, more diversification is possible, but100 different assets is far more than is needed for a reasonable level of diversification.
Yes, more diversification is possible, but100 different assets is far more than is needed for a reasonable level of diversification.
Edited by CarlosFandango11 on Friday 1st May 17:31
Ginge, interesting post and views. I am building a passive portfolio by holding Vanguard LS80% to try and diversify widely with what was originally humble amounts. I'm contributing monthly and intend on doing so for the foreseeable future.
At what point did you introduce active management into your portfolio? I have thought that once a steady foundation is built with Vanguard I might dip into some proven active managers funds (e.g. Woodford)
At what point did you introduce active management into your portfolio? I have thought that once a steady foundation is built with Vanguard I might dip into some proven active managers funds (e.g. Woodford)
Wayne,
I'm an adviser. Not all of my clients have Passives running alongside Actives, but some do - I don't change for the sake of it, but I like seeing how they bed in. Vanguard is great; cheap, low volatility and running a low tracking error. I wonder about the next few months though, more and more people will start chasing yield. These days, a couple of months is a long time in investing. Not like the old days!
If you want to introduce a little Active, look for managers who have a track record for performing well under defensive conditions (if that's what your outlook is), and if you can, see which managers stay within the remit of their brief. Just because a fund has done badly for a few months, doesn't make it a pup. Don't get *overly* fixated on cost though, but bear in mind, if you are just starting out, will you benefit with an increase in critical mass, versus the cost?
I'm an adviser. Not all of my clients have Passives running alongside Actives, but some do - I don't change for the sake of it, but I like seeing how they bed in. Vanguard is great; cheap, low volatility and running a low tracking error. I wonder about the next few months though, more and more people will start chasing yield. These days, a couple of months is a long time in investing. Not like the old days!
If you want to introduce a little Active, look for managers who have a track record for performing well under defensive conditions (if that's what your outlook is), and if you can, see which managers stay within the remit of their brief. Just because a fund has done badly for a few months, doesn't make it a pup. Don't get *overly* fixated on cost though, but bear in mind, if you are just starting out, will you benefit with an increase in critical mass, versus the cost?
Ginge R said:
The FTSE 100 is like a tin of jelly beans. They might all be different colours, but they're still jelly beans. If all you want to live on is jelly beans - fine. And even if you do want to live just on jelly beans you'll still get fed up with the same colour after a while. Trouble is, there aren't even 100 different colours either.
Not sure where you're going with your analogy. Why aren't there 100 different colours? Unless you mean that some companies are included in the FTSE100 more than once, which I didn't think was the case, then of course there would be 100 different colours - although there would be different shades of the same colour (some sectors will have more than one company in the FTSE100). And if you did get fed up of one colour, then there are 99 different colours...CarlosFandango11 said:
The FTSE100 is diversified.
Yes, more diversification is possible, but100 different assets is far more than is needed for a reasonable level of diversification.
Yes, more diversification is possible, but100 different assets is far more than is needed for a reasonable level of diversification.
Edited by CarlosFandango11 on Friday 1st May 17:31
Back to your claim of the FTSE isn't diversified, you still haven't explained why you think this. Given your posts on this thread, I suspect this is because you don't know/understand what diversification is? Could be a good time to stop digging and read up on diversification?
Ginge R said:
Walm,
It's up to us to either take the headline figures at face value (horses for courses, and that's fine) or dig deeper.
I happily concede though, you might know more about the company than me - my reference in general was aimed at the larger picture and remains (in my warped mind at least!) a good instinct to remain with.
I think you clearly know more about AZN than me, but I suspect you know that the PE is closer to 20 than 70 (which is all I really intended to point out).It's up to us to either take the headline figures at face value (horses for courses, and that's fine) or dig deeper.
I happily concede though, you might know more about the company than me - my reference in general was aimed at the larger picture and remains (in my warped mind at least!) a good instinct to remain with.
We are clearly both taking the extremes (you: reported numbers, me: fully-adjusted-remove-the-bad-bits numbers) to make our points.
Nevertheless, I maintain that any old-school snooze-fest in pharma trading at 70x true underlying earnings would be a lifetime-opportunity short!
Simpo Two said:
Employ Walm! (well, hire him for an hour a week)
I'll have you know that I no longer work by the hour!That was just a short period in my better-looking youth when I needed to pay off student loans.... wait... did you mean hire me for investment advice?
Lurking here, as I have done for months while researching money management (took Ginge R's advice, and been taking time out before jumping into anything).
Lady F is in big pharma, very senior, health economics (so actuarially pricing their pipeline and selling those prices to NICE, other regulators and insurance companies is her gig, and she's good at it).
Her view - Astra's figures don't make sense, and they have lower viable pipeline than anyone else. She just turned a very nice package down from them, on that basis.
So there you go.
Lady F is in big pharma, very senior, health economics (so actuarially pricing their pipeline and selling those prices to NICE, other regulators and insurance companies is her gig, and she's good at it).
Her view - Astra's figures don't make sense, and they have lower viable pipeline than anyone else. She just turned a very nice package down from them, on that basis.
So there you go.
Harry,
That's interesting to read, thanks - anecdotal insight is always good for the intelligence picture. The story doesn't add up and I agree - the pipeline appears to be tuning into an hour glass, the MEDI range seems to me (an outsider) to be stuttering. I wonder if the takeover bid resulted in a little hubris.
WALM,
I limit my direct equity research these days, into a couple of areas - pharma and defence, I spend my time researching boring funds and legislation etc now.
I am most certainly not as well informed as I used to imagine I once was (Pete Hargreaves said his week that most stock pickers are morons) so I'll happily disclose my limitations! The Astra figures don't make sense (imho) and although it's hard to pin the reason(s) down, sometimes you have to simply grow a set and make a call.
http://www.ftadviser.com/2015/04/29/ifa-industry/c...
That's interesting to read, thanks - anecdotal insight is always good for the intelligence picture. The story doesn't add up and I agree - the pipeline appears to be tuning into an hour glass, the MEDI range seems to me (an outsider) to be stuttering. I wonder if the takeover bid resulted in a little hubris.
WALM,
I limit my direct equity research these days, into a couple of areas - pharma and defence, I spend my time researching boring funds and legislation etc now.
I am most certainly not as well informed as I used to imagine I once was (Pete Hargreaves said his week that most stock pickers are morons) so I'll happily disclose my limitations! The Astra figures don't make sense (imho) and although it's hard to pin the reason(s) down, sometimes you have to simply grow a set and make a call.
http://www.ftadviser.com/2015/04/29/ifa-industry/c...
Ginge R said:
Pete Hargreaves said his week that most stock pickers are morons.
Like every industry you have a spread of abilities.And while you do seem to have the rare consistent outperformers (Woodford, Buffett, Bolton, Lynch etc...) there are certainly plenty who appear to leave a lot to be desired.
It just goes to show that it is very tough too, even for the non-morons.
Look at Odey last month!! Ouch.
thanks again everyone - I like the look of the Vangard Life Strategy option - nice and simple, but with historically decent returns.
Their website says you can buy into it via any number of banks via their Stocks and Shares ISA.
So, can someone confirm if my thinking is right if I:
1) Open up a Stocks and Shares ISA account (say with Halifax - £12.50 a year charge and lots of other charges that I don't understand, but at least it'll get me started) and then
2) Select the Vanguard Life Strategy option (presumably it will be in the investment choices) then
3) Select my £200pm as the amount to invest and then
4) Sit back and watch my millions be created!
That correct (apart from, possibly, number 4)??
Thanks again, appreciate all your input.
Paul.
Their website says you can buy into it via any number of banks via their Stocks and Shares ISA.
So, can someone confirm if my thinking is right if I:
1) Open up a Stocks and Shares ISA account (say with Halifax - £12.50 a year charge and lots of other charges that I don't understand, but at least it'll get me started) and then
2) Select the Vanguard Life Strategy option (presumably it will be in the investment choices) then
3) Select my £200pm as the amount to invest and then
4) Sit back and watch my millions be created!
That correct (apart from, possibly, number 4)??
Thanks again, appreciate all your input.
Paul.
Edited by Paul O on Friday 15th May 13:53
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