Index tracker v dividend investing
Discussion
I've got about 30k I want get working a bit harder.
I'm planning on it being a stocks and shares isa.
Are there any advantages between using index funds like 12k in vanguard s&p 500 , 12k in whole of the world , 8k in emerging markets .
Or dividend investing buying 5 quality stocks vs buying less stocks but more companies ?
I'm planning on it being a stocks and shares isa.
Are there any advantages between using index funds like 12k in vanguard s&p 500 , 12k in whole of the world , 8k in emerging markets .
Or dividend investing buying 5 quality stocks vs buying less stocks but more companies ?
S&P500 makes up such a huge proportion of the world that you would end up massively overweight US (Personally id rather be underweight US right now.)
Just buy a global ETF and fire and forget.
Buying companies for their dividend with no knowledge on how to value a company is likely to end in tears. (What do you class as a good company and how did you reach that conclusion?)
But its your money
Just buy a global ETF and fire and forget.
Buying companies for their dividend with no knowledge on how to value a company is likely to end in tears. (What do you class as a good company and how did you reach that conclusion?)
But its your money
Yield (dividend) in the UK market is much higher than North America where the focus is more on growth.
However, if your investments are in an ISA the concepts of "income" and "growth" are largely irrelevant as everything is tax free anyway. Just decide your level of risk/reward and go for it.
I consider trying to pick individual companies as high risk compared with being in a fund although you might save a wafer of cost that way. But there's no point saving 5p of cost and losing 30p of return.
You sound to me like a good candidate for low cost tracking.
However, if your investments are in an ISA the concepts of "income" and "growth" are largely irrelevant as everything is tax free anyway. Just decide your level of risk/reward and go for it.
I consider trying to pick individual companies as high risk compared with being in a fund although you might save a wafer of cost that way. But there's no point saving 5p of cost and losing 30p of return.
You sound to me like a good candidate for low cost tracking.
egor110 said:
I was looking at established companies such as
Johnson & Johnson
Coca cola
McDonald's
Realty income
Procter and gamble.
The problem with excluding stock picking (even if established companies) is that they can quickly become unestablished. Look at GE’s share performance, and BP, Shell etc,lJohnson & Johnson
Coca cola
McDonald's
Realty income
Procter and gamble.
95JO said:
VLS100 or VWRL and leave it.
If using Vanguard either of the above-mentioned or FTSE Global All Cap..and as above, leave it. Perfect 'fire and forget'. There will be alternatives to Vanguard, there will be cheaper options if going down the 'globally diversified' tracker or fund route but it really depends how much time you want to spend researching both the funds and platform fee comparisons etc
Edited by VR99 on Monday 8th February 17:05
Its all very well saying chuck you money in an index tracker and forget about it, but that overlooks one very important point; some people like to pick some individual shares for the pleure of seeing the results of their own research.
Definitely don't put all your pot in individual shares. We are, however, living pretty extraordinary times at the moment, so certain sectors are definitely more buoyant than others, and having a well-researched punt on some of these may pay off. Maybe put 75% in index trackers and then keep the rest to 'play with'.
I don't feel comfortable investing/betting on the companies hit by Coronavirus as any could fold before we are out of it, however the worldwide recognition, now that Trump is out, that we need to clean up the environment, is causing some steep rises in share prices of companies working on electric vehicles, fuel cells, hydrogen and renewable energy. If you do your own research and invest in companies which already have something tangible, but avoid the best known names (e.g. I wouldn't touch Tesla except via an investment trust), you could do well. A good piece of advice is to only invest in businesses you can understand.
Having a few shares that pay decent dividends, such as DGOC, that I mentioned elsewhere, give you some money to spend on other shares. Typically once I get upwards of £1K I go shopping with it, usually when a general market dip makes the share I want better value. Everything I have bought in the last calendar year has paid off.
Make sure no individual holding is more than you can afford to lose completely, and set up a few simulated portfolios on HL and watch them for a few weeks or months before taking the plunge.
Its your money, so don't be totally stupid with it, but do have fun as well.
Oh, one more thing, do get a copy of "How to Own the World" by Andrew Craig. I first saw it mentioned on PH and it is money very well spent.
Definitely don't put all your pot in individual shares. We are, however, living pretty extraordinary times at the moment, so certain sectors are definitely more buoyant than others, and having a well-researched punt on some of these may pay off. Maybe put 75% in index trackers and then keep the rest to 'play with'.
I don't feel comfortable investing/betting on the companies hit by Coronavirus as any could fold before we are out of it, however the worldwide recognition, now that Trump is out, that we need to clean up the environment, is causing some steep rises in share prices of companies working on electric vehicles, fuel cells, hydrogen and renewable energy. If you do your own research and invest in companies which already have something tangible, but avoid the best known names (e.g. I wouldn't touch Tesla except via an investment trust), you could do well. A good piece of advice is to only invest in businesses you can understand.
Having a few shares that pay decent dividends, such as DGOC, that I mentioned elsewhere, give you some money to spend on other shares. Typically once I get upwards of £1K I go shopping with it, usually when a general market dip makes the share I want better value. Everything I have bought in the last calendar year has paid off.
Make sure no individual holding is more than you can afford to lose completely, and set up a few simulated portfolios on HL and watch them for a few weeks or months before taking the plunge.
Its your money, so don't be totally stupid with it, but do have fun as well.
Oh, one more thing, do get a copy of "How to Own the World" by Andrew Craig. I first saw it mentioned on PH and it is money very well spent.
egor110 said:
I've got about 30k I want get working a bit harder.
I'm planning on it being a stocks and shares isa.
Are there any advantages between using index funds like 12k in vanguard s&p 500 , 12k in whole of the world , 8k in emerging markets .
Or dividend investing buying 5 quality stocks vs buying less stocks but more companies ?
What are you investing for?I'm planning on it being a stocks and shares isa.
Are there any advantages between using index funds like 12k in vanguard s&p 500 , 12k in whole of the world , 8k in emerging markets .
Or dividend investing buying 5 quality stocks vs buying less stocks but more companies ?
Do you want to take the natural yield from investments or do you think that by reinvesting the dividends you will achieve some growth?
Growth assets will deliver more over time than income generating assets (with income reinvested) so, if you are not looking to utilise the income then stick with growth investments. If you must have income stream then why not look at global income funds?
cloud_dog said:
egor110 said:
I've got about 30k I want get working a bit harder.
I'm planning on it being a stocks and shares isa.
Are there any advantages between using index funds like 12k in vanguard s&p 500 , 12k in whole of the world , 8k in emerging markets .
Or dividend investing buying 5 quality stocks vs buying less stocks but more companies ?
What are you investing for?I'm planning on it being a stocks and shares isa.
Are there any advantages between using index funds like 12k in vanguard s&p 500 , 12k in whole of the world , 8k in emerging markets .
Or dividend investing buying 5 quality stocks vs buying less stocks but more companies ?
Do you want to take the natural yield from investments or do you think that by reinvesting the dividends you will achieve some growth?
Growth assets will deliver more over time than income generating assets (with income reinvested) so, if you are not looking to utilise the income then stick with growth investments. If you must have income stream then why not look at global income funds?
To make my money do more , ive paid off the mortgage so it's just sat in the bank earning 0.4% .
I'm 47 my mrs is 50 so I'm guessing I'd just like to do something in preparation for our 60s.
I'm in a similar situation to you OP. Mostly invested in low cost trackers in US, UK, Japan and to a lesser extent Pacific ex Japan. However a couple of years ago I started an experiment into high yield shares and bought a carefully balanced range of FTSE100 companies as a practical test of an income portfolio for future retirement. Needless to say that last years battering of the UK stock market has not done me any favours there when even Shell cancel their dividend you know the party's over!
While shares are fun they can have significant transaction costs so they need to be long term buy and hold just to offset costs, dividends can be cut or cancelled which will also hurt the sell price should you need to sell up, also getting a sufficiently diversified spread of sectors means investing in 10-20 companies.
While shares are fun they can have significant transaction costs so they need to be long term buy and hold just to offset costs, dividends can be cut or cancelled which will also hurt the sell price should you need to sell up, also getting a sufficiently diversified spread of sectors means investing in 10-20 companies.
I have a mix of funds and individual stocks. Most of the individuals are legacy things I’ve picked up over a number of years, then transferred them in to my ISA, also they were before I started buying funds.
The individual picks include dividend favourites like BP and Shell, some bank stocks and some miners. Ok, 2020 was a bit of a s
tshow but from the January peak to their bottom, they tanked 55% and are still down 30-40% pretty much across the board.
Funds I invested in during January and February, at the market peak, are up 7% and 8% respectively.
I’m in the process of unwinding my individual stock holdings when the time is right and just using the money to buy more funds.
The individual picks include dividend favourites like BP and Shell, some bank stocks and some miners. Ok, 2020 was a bit of a s
tshow but from the January peak to their bottom, they tanked 55% and are still down 30-40% pretty much across the board.Funds I invested in during January and February, at the market peak, are up 7% and 8% respectively.
I’m in the process of unwinding my individual stock holdings when the time is right and just using the money to buy more funds.
drmotorsport said:
I'm in a similar situation to you OP. Mostly invested in low cost trackers in US, UK, Japan and to a lesser extent Pacific ex Japan. However a couple of years ago I started an experiment into high yield shares and bought a carefully balanced range of FTSE100 companies as a practical test of an income portfolio for future retirement. Needless to say that last years battering of the UK stock market has not done me any favours there when even Shell cancel their dividend you know the party's over!
While shares are fun they can have significant transaction costs so they need to be long term buy and hold just to offset costs, dividends can be cut or cancelled which will also hurt the sell price should you need to sell up, also getting a sufficiently diversified spread of sectors means investing in 10-20 companies.
How come you went for uk shares ?While shares are fun they can have significant transaction costs so they need to be long term buy and hold just to offset costs, dividends can be cut or cancelled which will also hurt the sell price should you need to sell up, also getting a sufficiently diversified spread of sectors means investing in 10-20 companies.
Most stuff I've read/watched has gone s&p 500 as its the biggest market.
I think only procter and gamble and Unilever are the only uk companies I'd be tempted with .
egor110 said:
How come you went for uk shares ?
Most stuff I've read/watched has gone s&p 500 as its the biggest market.
I think only procter and gamble and Unilever are the only uk companies I'd be tempted with .
Many UK FTSE100 companies are global organisations and therefore more resillient to localised issues, aIso wanted to avoid currency complications. Plus UK companies are famously associated with paying their shreholders dividends unlike US outfits which are all about growth, i'm pretty sure Apple still haven't ever paid a divi!Most stuff I've read/watched has gone s&p 500 as its the biggest market.
I think only procter and gamble and Unilever are the only uk companies I'd be tempted with .
Even if its just for fun it's still important to have a grip on the numbers. Investing for income means looking for companies that pay a dividend yield greater than the market average, that the yield is also rising and that is hopfully affordable for the company to pay. I've found this is a useful resource: https://www.dividenddata.co.uk/dividendyield.py?ma...
drmotorsport said:
egor110 said:
How come you went for uk shares ?
Most stuff I've read/watched has gone s&p 500 as its the biggest market.
I think only procter and gamble and Unilever are the only uk companies I'd be tempted with .
Many UK FTSE100 companies are global organisations and therefore more resillient to localised issues, aIso wanted to avoid currency complications. Plus UK companies are famously associated with paying their shreholders dividends unlike US outfits which are all about growth, i'm pretty sure Apple still haven't ever paid a divi!Most stuff I've read/watched has gone s&p 500 as its the biggest market.
I think only procter and gamble and Unilever are the only uk companies I'd be tempted with .
Even if its just for fun it's still important to have a grip on the numbers. Investing for income means looking for companies that pay a dividend yield greater than the market average, that the yield is also rising and that is hopfully affordable for the company to pay. I've found this is a useful resource: https://www.dividenddata.co.uk/dividendyield.py?ma...
I'm not even looking at stuff like apple or Tesla for a dividend paying company.
why the obsession with dividends?
The only thing that matters is total return. Growth or Dividend it doesn't matter where it comes from.
Would you have rather owned the FTSE100 with its juicy dividends or the S&P 500 over the last 10 years?
Also, need to be aware that a dividend is also a return of capital, not a return on capital.
Its possible you will pay 2 layers of taxation before you receive your - corporation tax & income tax - (ignoring ISAs) - its a very inefficient way of accessing capital.
The only thing that matters is total return. Growth or Dividend it doesn't matter where it comes from.
Would you have rather owned the FTSE100 with its juicy dividends or the S&P 500 over the last 10 years?
Also, need to be aware that a dividend is also a return of capital, not a return on capital.
Its possible you will pay 2 layers of taxation before you receive your - corporation tax & income tax - (ignoring ISAs) - its a very inefficient way of accessing capital.
rustyuk said:
You might want to read his books but you may want to check the performance of his fund before following any of his advice.
Ha ha - I read his book and then saw the performance of his fund.But he does make some sense, even if it's to get you started. Although he does seem a little bit "The world is out to get you".
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