Best Low-Cost Index Tracker(s) for Starter Portfolio?
Discussion
I've just finished reading Tony Robbins' "Money, Master the Game" book, which has completely changed my outlook on my financial life completely!
Beforehand, I used to live paycheque to paycheque and use credit cards etc., spending all my money in a month but not saving any. I know this goes against common sense but it just became habit. I guess I knew in the back of my head certain aspects of the plan that he outlines, but I didn't know enough about how it would all come together to have faith in it.
I've changed my ways and I've almost paid off my main credit card. I anticipate that in the next two months, I'll have paid it off completely, and the only debt I will have left will be a 0% balance-transferred credit card, the remaining 2 years of a PCP deal on my car, and my mortgage.
I'd like to eventually save 10% of my post-tax income per month, and allocate it to a diverse portfolio made up of index trackers, shares, bonds, gold, commodities, etc. but at the moment, I'm just looking to start this off by investing approx. £75 to £80 per month in low-cost index tracker(s). I'll diversify over time as and when I can save more.
So which should I choose??? I'd like exposure to the following if possible, I don't know whether it's best to have one that covers all these bases, or separate ones, all from the same provider, or separate providers...?
1. FTSE UK Stock Market
2. S&P 500 US Stock Market
3. Global coverage for a 'catch-all'?
4. Some kind of emerging markets index for more risk and growth?
5. Some coverage for the European markets including the Swiss S.E. etc?
Just to add, I'm a higher rate taxpayer, who doesn't take advantage of using any ISA of either type at the moment.
Are there certain that are regarded as the "best"?
Thanks for any help offered, as I'm just starting out in this exciting minefield!
Beforehand, I used to live paycheque to paycheque and use credit cards etc., spending all my money in a month but not saving any. I know this goes against common sense but it just became habit. I guess I knew in the back of my head certain aspects of the plan that he outlines, but I didn't know enough about how it would all come together to have faith in it.
I've changed my ways and I've almost paid off my main credit card. I anticipate that in the next two months, I'll have paid it off completely, and the only debt I will have left will be a 0% balance-transferred credit card, the remaining 2 years of a PCP deal on my car, and my mortgage.
I'd like to eventually save 10% of my post-tax income per month, and allocate it to a diverse portfolio made up of index trackers, shares, bonds, gold, commodities, etc. but at the moment, I'm just looking to start this off by investing approx. £75 to £80 per month in low-cost index tracker(s). I'll diversify over time as and when I can save more.
So which should I choose??? I'd like exposure to the following if possible, I don't know whether it's best to have one that covers all these bases, or separate ones, all from the same provider, or separate providers...?
1. FTSE UK Stock Market
2. S&P 500 US Stock Market
3. Global coverage for a 'catch-all'?
4. Some kind of emerging markets index for more risk and growth?
5. Some coverage for the European markets including the Swiss S.E. etc?
Just to add, I'm a higher rate taxpayer, who doesn't take advantage of using any ISA of either type at the moment.
Are there certain that are regarded as the "best"?
Thanks for any help offered, as I'm just starting out in this exciting minefield!
+1
And read this http://orcamgroup.com/wp-content/uploads/2014/08/U...
Diversification, currency risk, risk tollerance, timeframes etc will all come into it.
Do lots of reading the info is out there. Just take your time.
Monevator website is also great, read lots of their articles and links.
And read this http://orcamgroup.com/wp-content/uploads/2014/08/U...
Diversification, currency risk, risk tollerance, timeframes etc will all come into it.
Do lots of reading the info is out there. Just take your time.
Monevator website is also great, read lots of their articles and links.
Nobody knows you better than yourself. So arm yourself with the tools to make your own decisions.
What works for me wont work for you due to the above considerations around time-scales, risks etc.
Of course you could waste more money and pay some oik to tell you. It will still just be someone else's opinion.. But I would only do that if I was brain dead and lazy.
Which actually quite a few people are.
Go to monevator website, come back in a week's time and run your plan past the discerning eye's here. Or for that matter over at fool.co.uk etc.
You will probably end back looking at Vanguard, but at least you will know how much exposure to emerging markets, bonds and UK stocks you think you should have based on your risk profile and time horizon.
What works for me wont work for you due to the above considerations around time-scales, risks etc.
Of course you could waste more money and pay some oik to tell you. It will still just be someone else's opinion.. But I would only do that if I was brain dead and lazy.
Which actually quite a few people are.
Go to monevator website, come back in a week's time and run your plan past the discerning eye's here. Or for that matter over at fool.co.uk etc.
You will probably end back looking at Vanguard, but at least you will know how much exposure to emerging markets, bonds and UK stocks you think you should have based on your risk profile and time horizon.
M3Driver said:
Unless some successful, knowledgeable PH'rs were feeling philanthropic with their time and advice-giving skills...
Qualified and regulated wealth managers do not dish out financial advice on the internet - not if they want to stay qualified and regulated.And contrary to the hogwash written above we go to considerable lengths to understand your objectives, risk profile, investment horizon etc etc
So, some friendly pointers you may well get but anyone spouting specific investment advice on here is almost certainly not qualified to do so.
Good luck though as there has never been an easier time to take your affairs in hand yourself.
Hahahaha. I'd posted my comment before I'd even seen yours! :-)
Thanks, seems like a few good pointers there. I'll go and research more and try to come up with some answers.
I guess you're right, everyone's circumstances are different. I'm 33 with a reasonably high-ish / average-ish salary. I already contribute 8% matched contributions to my employer pension, but I want to treat this post-tax 10% as something separate.
I guess the fact that Warren Buffett recommends the Vanguard VFINX S&P 500 index means it can't be a bad place to start.
Thanks, seems like a few good pointers there. I'll go and research more and try to come up with some answers.
I guess you're right, everyone's circumstances are different. I'm 33 with a reasonably high-ish / average-ish salary. I already contribute 8% matched contributions to my employer pension, but I want to treat this post-tax 10% as something separate.
I guess the fact that Warren Buffett recommends the Vanguard VFINX S&P 500 index means it can't be a bad place to start.
DoubleSix said:
Qualified and regulated wealth managers do not dish out financial advice on the internet - not if they want to stay qualified and regulated.
And contrary to the hogwash written above we go to considerable lengths to understand your objectives, risk profile, investment horizon etc etc
So, some friendly pointers you may well get but anyone spouting specific investment advice on here is almost certainly not qualified to do so.
Good luck though as there has never been an easier time to take your affairs in hand yourself.
Thanks for your advice, and I understand where you are coming from. You speak sense.And contrary to the hogwash written above we go to considerable lengths to understand your objectives, risk profile, investment horizon etc etc
So, some friendly pointers you may well get but anyone spouting specific investment advice on here is almost certainly not qualified to do so.
Good luck though as there has never been an easier time to take your affairs in hand yourself.
I guess I could visit an IFA and have them come up with a portfolio for me, but I'm not sure how the payments / fees / commissions would be paid now that the regulation has been re-structured.
I also have concerns about who I could trust to give me the best advice, and how they are any better at knowing what to do than the next person. I have known IFA's who should have been able to run a portfolio and make decent returns for themselves on their own portfolio, but haven't. I guess it's like being asked to trust a personal fitness trainer who was 10st overweight...
M3Driver said:
DoubleSix said:
Qualified and regulated wealth managers do not dish out financial advice on the internet - not if they want to stay qualified and regulated.
And contrary to the hogwash written above we go to considerable lengths to understand your objectives, risk profile, investment horizon etc etc
So, some friendly pointers you may well get but anyone spouting specific investment advice on here is almost certainly not qualified to do so.
Good luck though as there has never been an easier time to take your affairs in hand yourself.
Thanks for your advice, and I understand where you are coming from. You speak sense.And contrary to the hogwash written above we go to considerable lengths to understand your objectives, risk profile, investment horizon etc etc
So, some friendly pointers you may well get but anyone spouting specific investment advice on here is almost certainly not qualified to do so.
Good luck though as there has never been an easier time to take your affairs in hand yourself.
I guess I could visit an IFA and have them come up with a portfolio for me, but I'm not sure how the payments / fees / commissions would be paid now that the regulation has been re-structured.
I also have concerns about who I could trust to give me the best advice, and how they are any better at knowing what to do than the next person. I have known IFA's who should have been able to run a portfolio and make decent returns for themselves on their own portfolio, but haven't. I guess it's like being asked to trust a personal fitness trainer who was 10st overweight...
Many couldn't put a portfolio together to save their lives.
If you are just looking to use trackers longterm with what are relatively small sums then I think you are already half way there. Keep it simple.
It is impossible/inappropriate to advise. You need to DIY it or pay an advisor.
If you decide to DIY it's worth looking at funds suggested (note: not "recommended") by the two big retail operations Fidelity and Hargreaves Lansdown.
https://www.fidelity.co.uk/investor/funds/find-fun...
http://www.hl.co.uk/funds/wealth-150
As regards index trackers it's worth bearing in mind they tend to underperform the index they are tracking. Many people prefer to invest in something with an active fund manager making the decisions. For instance: imagine a company in the index which falls on hard times and is slipping down the index. An active manager can "get out", an index tracker can't. Similarly there may be excellent companies on the way up which haven't yet made it into the index. A tracker has no opportunity to see them coming and "get in early".
.... and don't forget that ISA or pension are by far the most tax efficient ways to hold investments. You will find both of the companies mentioned above can offer these "wrappers" on a very competitive basis.
If you decide to DIY it's worth looking at funds suggested (note: not "recommended") by the two big retail operations Fidelity and Hargreaves Lansdown.
https://www.fidelity.co.uk/investor/funds/find-fun...
http://www.hl.co.uk/funds/wealth-150
As regards index trackers it's worth bearing in mind they tend to underperform the index they are tracking. Many people prefer to invest in something with an active fund manager making the decisions. For instance: imagine a company in the index which falls on hard times and is slipping down the index. An active manager can "get out", an index tracker can't. Similarly there may be excellent companies on the way up which haven't yet made it into the index. A tracker has no opportunity to see them coming and "get in early".
.... and don't forget that ISA or pension are by far the most tax efficient ways to hold investments. You will find both of the companies mentioned above can offer these "wrappers" on a very competitive basis.
Edited by Claudia Skies on Wednesday 11th February 18:12
vanguard lifestrategy 80% equity
http://monevator.com/vanguard-lifestrategy/
http://www.hl.co.uk/funds/fund-discounts,-prices--...
http://monevator.com/vanguard-lifestrategy/
http://www.hl.co.uk/funds/fund-discounts,-prices--...
The fund/tax tail doesn't wag the dog. Identify your preferred tax wrappers, contingencies and exit strategies. Identify your objectives, parameters, targets and buffers - then extrapolate back and nail the levels and nature of disposition, contributions and risk that you need to achieve those objectives.
Mr Trophy said:
@ringram what are your thoughts on Vanguard?
Dont have any opinion other than they are generally fairly low cost.And we know about costs.. https://personal.vanguard.com/us/insights/investin...
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