Financial advice pls

[ritch]

Looking for some financial advice on behalf of one of my siblings, who is coming into a bit of money. Probably small change for a powerfully built PH director, but significant for her (>£50K <£100K) and is intended to support retirement etc.

The ask is what is the best option to make this money work in terms of growth for 5 – 10 years to support retirement when it comes? The approach preferred is not hands on eg constantly managing stocks and shares, more of invest and let the interest rack up over a number of years.
I would have suggested Vanguard, but I’m losing money on Vanguard (assuming its the funds I randomly guessed at!), so not sure I could endorse this to family.

Open to suggestions & recommendations.

[Carbon Sasquatch]

It's a tough one - my daughter had a similar amount and asked me to 'just invest it' for her - that was about 6 months ago and it's currently worth less than when she gave it to me.....

My stuff is down by at least as much, but I feel much worse about hers.

[Claret m]

I would suggest you look into Capital Gearing Trust, code CGT. Please do your own homework, they are relatively low risk but tend to return around 5-10% per annum. Please also be aware the trust can go down as well as up, however in the last 40 years they have only lost money in one year.

[jimwilli]

How old is she? Does she have a Lisa if the money is for retirement?

[BlackG7R]

If you are currently "losing" money on your Vanguard fund, that means it's getting cheaper to buy. That doesn't mean that a Vanguard fund is suddenly a bad investment.

If she is really looking at a 5-10 year time frame, for the investment then it is (almost) certain to grow significantly over that time.

If you find something that will grow faster than this Vanguard fund the chances are you / she will be taking more risk.

[Mr Whippy]

BlackG7R said:

If you are currently "losing" money on your Vanguard fund, that means it's getting cheaper to buy. That doesn't mean that a Vanguard fund is suddenly a bad investment

Hmmmm.

So would you stick ~£75,000 in today?

Or would you be tempted to buy into that fund over the next 3 years, using high yielding cash savings accounts and S&S ISA allowances to end at 36 months with it all in an ISA wrapper compounding up really efficiently?

[bitchstewie]

Vanguard offer a financial advice service at relatively low cost if you meet the criteria.

https://www.vanguardinvestor.co.uk/financial-advic...

That could be something to consider if you don't want the responsibility of being on the hook for investment decisions.

[Carbon Sasquatch]

Depending on her age & income level -if she is working, she might actually be better spending it - and salary sacrificing the equivalent amount straight into a pension

[BlackG7R]

Mr Whippy said:

BlackG7R said:

If you are currently "losing" money on your Vanguard fund, that means it's getting cheaper to buy. That doesn't mean that a Vanguard fund is suddenly a bad investment

Hmmmm.

So would you stick ~£75,000 in today?

Or would you be tempted to buy into that fund over the next 3 years, using high yielding cash savings accounts and S&S ISA allowances to end at 36 months with it all in an ISA wrapper compounding up really efficiently?

My point was really just to say that prices will always fluctuate, so the fact it has gone down recently doesn't suddenly make it a bad investment, it means you can buy cheaper now, or buy more "units" for the same amount of money, and that over a 5 or 10 year period you will almost certainly be up on the deal.

I think studies show that in most cases you are better off chucking in the lump sum now, rather than averaging in over time (because the markets spend roughly 1/3 of the time going down, but 2/3 of the time going up)

But I can totally understand why you might be nervous doing that.

I foolishly sold a chunk of a Vanguard fund when I thought the market was getting a bit frothy a while back, and sure enough it just carried on going up.

I am now a bit nervous about chucking it all back in one go, so I'm averaging back in.

[Mr Whippy]

I wonder over what time spans those studies were carried out wrt lump vs averaging in.

[Carbon Sasquatch]

Mr Whippy said:

I wonder over what time spans those studies were carried out wrt lump vs averaging in.

In a rising market you're better off being all in early - so I guess if you accept the 1/3 falling vs 2/3 rising bit - then 2/3 of the time you're better off.

However that 1/3 of the time may lose more money.....

[BlackG7R]

There's a ton of videos on this subject on YT, so watch a few, and make your own judgement I guess.


This guy is good.

https://www.youtube.com/watch?v=pTG8IBaquVI

Edited by BlackG7R on Tuesday 26th April 22:07

[chip*]

BlackG7R said:

I foolishly sold a chunk of a Vanguard fund when I thought the market was getting a bit frothy a while back, and sure enough it just carried on going up.

I am now a bit nervous about chucking it all back in one go, so I'm averaging back in.

Your sentence reminded me of some traits related to Behavioural Finance which I was researching earlier this year (kicked off when BG America dropped >30% and now you could say the same for Netflix which will be a penny share soon! )

(not the best article but it explains the basic https://thedecisionlab.com/biases/disposition-effe...

IMO, fascinating topic which explains how we behave differently depending on our investment profit / loss position.

Edited by chip* on Tuesday 26th April 23:30

[ritch]

thanks for replies - plenty of food for thought. I'll go through them with her and let her choose from there.

[BlackG7R]

chip* said:

BlackG7R said:

I foolishly sold a chunk of a Vanguard fund when I thought the market was getting a bit frothy a while back, and sure enough it just carried on going up.

I am now a bit nervous about chucking it all back in one go, so I'm averaging back in.

Your sentence reminded me of some traits related to Behavioural Finance which I was researching earlier this year (kicked off when BG America dropped >30% and now you could say the same for Netflix which will be a penny share soon! )

(not the best article but it explains the basic https://thedecisionlab.com/biases/disposition-effe...

IMO, fascinating topic which explains how we behave differently depending on our investment profit / loss position.

Edited by chip* on Tuesday 26th April 23:30

This is worth a read if you haven't already.