FTSE100 tracker
Discussion
Feeling that I have enough in 'rainy day' savings, I feel it's time to start putting money into something that will hopefully return a little more than 1% a year, but is reasonably safe in the long term (appreciating that it might go down as well as up in the short term).
So my feeling is to start drip feeding money monthly into a FTSE100 tracker, one where the dividends go back into the account to continue accruing.
Having had a look around, this one seems to offer a good blend of a cheap rate but with a respectable company.
https://www.vanguardinvestor.co.uk/investments/van...
Before I kick it off (and accepting that I really know nothing at all about this) I thought I'd post it up here in case anyone could offer any thoughts that I might not have considered?
So my feeling is to start drip feeding money monthly into a FTSE100 tracker, one where the dividends go back into the account to continue accruing.
Having had a look around, this one seems to offer a good blend of a cheap rate but with a respectable company.
https://www.vanguardinvestor.co.uk/investments/van...
Before I kick it off (and accepting that I really know nothing at all about this) I thought I'd post it up here in case anyone could offer any thoughts that I might not have considered?
The name "FTSE 100 index" makes it sound like 100 similarly sized big companies. It's not. A handful of humungous companies at the top dominate the index, making it very lopsided towards banks, pharmaceuticals and oil.
http://www.stockchallenge.co.uk/ftse.php
My own preference would be a managed fund of some kind, but if I was going to choose tracking the UK market as a main strategy I'd want to track a broader index such as FTSE 350. This could be achieved by, say, splitting your money between well regarded FTSE 100 and FTSE 250 trackers.
Remember,
http://www.stockchallenge.co.uk/ftse.php
My own preference would be a managed fund of some kind, but if I was going to choose tracking the UK market as a main strategy I'd want to track a broader index such as FTSE 350. This could be achieved by, say, splitting your money between well regarded FTSE 100 and FTSE 250 trackers.
Remember,
- FTSE 100 is the top 100
- FTSE 250 is the NEXT 250, not the top 250
- FTSE 350 is the top 350. In other words, it combines both of the two above.
Vanguard is the gold standard but it's worth thinking about what FTSE100 exposure really is. What it is not is a bet on UK GDP - it's better to think of it as a GBP short with exposure to global macro, weighted towards commodities (oil, mining).
ETA: poster above me said the same thing much better
ETA: poster above me said the same thing much better
Ari said:
So my feeling is to start drip feeding money monthly into a FTSE100 tracker,
Why FTSE 100 rather than whole world?http://monevator.com/why-a-total-world-equity-inde...
may be worth a read.
rockin said:
The name "FTSE 100 index" makes it sound like 100 similarly sized big companies. It's not. A handful of humungous companies at the top dominate the index, making it very lopsided towards banks, pharmaceuticals and oil.
http://www.stockchallenge.co.uk/ftse.php
My own preference would be a managed fund of some kind, but if I was going to choose tracking the UK market as a main strategy I'd want to track a broader index such as FTSE 350. This could be achieved by, say, splitting your money between well regarded FTSE 100 and FTSE 250 trackers.
Remember,
That's really helpful, thanks. http://www.stockchallenge.co.uk/ftse.php
My own preference would be a managed fund of some kind, but if I was going to choose tracking the UK market as a main strategy I'd want to track a broader index such as FTSE 350. This could be achieved by, say, splitting your money between well regarded FTSE 100 and FTSE 250 trackers.
Remember,
- FTSE 100 is the top 100
- FTSE 250 is the NEXT 250, not the top 250
- FTSE 350 is the top 350. In other words, it combines both of the two above.
My logic (such as it is) comes from reading somewhere that over the long term it's rare for a managed fund to beat the FTSE100.
Obviously you always hear about the two years Fund X performed spectacularly, and the following two years Fund Y was the one to be in, but of course you only know that after the event.
Overall it seems that the FTSE100 is a pretty safe and steady bet - less of a gamble (but of course less of the big returns you might get if you hit the right fund at the right time).
But yes, maybe I should be considering the FSTE250 as well (and I didn't realise that it was the top 100-350, I assumed it was the top 250, so thanks for explaining that).
As you've no doubt gathered, I'm no shrewd investor. I'm just looking for somewhere to start to build up some cash toward retirement (10-20 years).
xeny said:
Why FTSE 100 rather than whole world?
http://monevator.com/why-a-total-world-equity-inde...
may be worth a read.
That's a really interesting read! http://monevator.com/why-a-total-world-equity-inde...
may be worth a read.
Ari,
Try to keep matters as simple as possible.
An index fund does not interest me, but I would consider the FTSE 100 to be a reasonable start for a new investor.
Once you begin to consider 250, 350, All-Share or World, it just gets more confusing.
In reality, there is often very little annual performance difference between the 100 and All-Share.
In 2016;
All-Share = +12.45%
FTSE 100 = +14.43%
In 2017 (to 24 Nov);
All-Share = +5.09%
FTSE 100 = +3.74.%
If I did want to invest in a FTSE 100 Tracker, I think I would look back, to see if the firm had a good record of results finishing close to the Index performance. Remember the actual index numbers do not include dividends received, which at present represents about 4% of capital. The index therefore understates a real investment in the Index shares.
Anyone running an index fund is not a charity, so be ready for deductions.
Good advice, thanks. It seems to me that this fella might be a good place to start (via an ISA account of course).
https://www.vanguardinvestor.co.uk/investments/van...
And then I can always diversify into other accounts should I wish in future.
https://www.vanguardinvestor.co.uk/investments/van...
And then I can always diversify into other accounts should I wish in future.
Finally got my Vanguard FTSE 100 Index Unit Trust Accumulation fund up and running. Set up a monthly direct debit for the 1st of each month but decided to stick a small amount in straight away just to watch and see what happened.
A fortnight in and I'm 1.52% up! That sure beats 1% in a year from a savings ISA!
But yes, I do appreciated it can go the other way too. Interesting though...
A fortnight in and I'm 1.52% up! That sure beats 1% in a year from a savings ISA!
But yes, I do appreciated it can go the other way too. Interesting though...
I use the legal and general index trackers and have considered luk2 and suk2 etf s in the past. I got out of the ftse tracker in September, personally I'm not optimistic about the ftse 100 until the full ramifications of the brezit deal is done. Like someone said about the ftse 100 is quite heavily skewed toward a couple of dozen very large international corporates.
I still have the world tracker linked above and aHSBC 250 tracker.
I still have the world tracker linked above and aHSBC 250 tracker.
bhstewie said:
In a similar position to Ari. Vanguard looks as simple as "buy now" - really?
.
Pretty much..
Questions to ask yourself are
Am I happy 100% in equities? ie you’re in for over say 5 years, you’re after more return and am prepared to accept volatility in order to get it.
If you think at some point you may want to hold individual companies or funds not from vanguard then using someone other than vanguard as a broker, even if right now you only want to hold vanguard funds, is worth considering.
FredClogs said:
I got out of the ftse tracker in September, personally I'm not optimistic about the ftse 100 until the full ramifications of the brezit deal is done. Like someone said about the ftse 100 is quite heavily skewed toward a couple of dozen very large international corporates.
I have a lot of sympathy with that logic, but my feeling is that I'm dripping in at two or three hundred a month so it's not like I've stuck £50K in and stand to lose half of it.Plus it is a very long term investment, lets say it does halve - well then my couple of hundred each month will be buying twice as much until it recovers.
As a savings account it's too much of a gamble because you can't necessarily time when you need the money, but assuming there are seperate 'rainy day' savings I feel that long term it is unlikely it will dip and never recover.
(He says from a position of zero knowledge..! )
xeny said:
Pretty much.
Questions to ask yourself are
Am I happy 100% in equities? ie you’re in for over say 5 years, you’re after more return and am prepared to accept volatility in order to get it.
If you think at some point you may want to hold individual companies or funds not from vanguard then using someone other than vanguard as a broker, even if right now you only want to hold vanguard funds, is worth considering.
I found it very easy (and I'm not generally good with this sort of stuff).Questions to ask yourself are
Am I happy 100% in equities? ie you’re in for over say 5 years, you’re after more return and am prepared to accept volatility in order to get it.
If you think at some point you may want to hold individual companies or funds not from vanguard then using someone other than vanguard as a broker, even if right now you only want to hold vanguard funds, is worth considering.
I personally can only see individual funds making sense if you have an 'edge', if you feel you're better placed to price those funds than 'the market'. I don't, hence the FTSE100 tracker.
Ari said:
FredClogs said:
I got out of the ftse tracker in September, personally I'm not optimistic about the ftse 100 until the full ramifications of the brezit deal is done. Like someone said about the ftse 100 is quite heavily skewed toward a couple of dozen very large international corporates.
I have a lot of sympathy with that logic, but my feeling is that I'm dripping in at two or three hundred a month so it's not like I've stuck £50K in and stand to lose half of it.Plus it is a very long term investment, lets say it does halve - well then my couple of hundred each month will be buying twice as much until it recovers.
As a savings account it's too much of a gamble because you can't necessarily time when you need the money, but assuming there are seperate 'rainy day' savings I feel that long term it is unlikely it will dip and never recover.
(He says from a position of zero knowledge..! )
There's no "free lunch", you get another layer of risk on the market. In addition,
"ETFs have seen spectacular growth in popularity and, in many cases, this popularity is well deserved. But, like all good things, ETFs also have their drawbacks. Making sound investment decisions requires knowing all of the facts about a particular investment vehicle – ETFs are no different. Knowing the disadvantages will help steer you away from potential pitfalls and, if all goes well, toward tidy profits.
"ETFs are traded like stocks; therefore, every time you want to purchase $1,000 worth of that particular ETF, you have to pay your broker a commission to do so. As a result, it can become more costly to build a position in an ETF with monthly investments. For this reason, trading an ETF favors the lump sum approach. The rule here is to try to invest a lump sum at one time to cut down on brokerage fees."
"ETFs have seen spectacular growth in popularity and, in many cases, this popularity is well deserved. But, like all good things, ETFs also have their drawbacks. Making sound investment decisions requires knowing all of the facts about a particular investment vehicle – ETFs are no different. Knowing the disadvantages will help steer you away from potential pitfalls and, if all goes well, toward tidy profits.
"ETFs are traded like stocks; therefore, every time you want to purchase $1,000 worth of that particular ETF, you have to pay your broker a commission to do so. As a result, it can become more costly to build a position in an ETF with monthly investments. For this reason, trading an ETF favors the lump sum approach. The rule here is to try to invest a lump sum at one time to cut down on brokerage fees."
Yep lump sum is the way to do it anyway. Statistically speaking.
https://advisors.vanguard.com/VGApp/iip/site/advis...
https://advisors.vanguard.com/VGApp/iip/site/advis...
Ari said:
Finally got my Vanguard FTSE 100 Index Unit Trust Accumulation fund up and running. Set up a monthly direct debit for the 1st of each month but decided to stick a small amount in straight away just to watch and see what happened.
A fortnight in and I'm 1.52% up! That sure beats 1% in a year from a savings ISA!
But yes, I do appreciated it can go the other way too. Interesting though...
Now 2.43% up and wishing I'd put a lot more in! A fortnight in and I'm 1.52% up! That sure beats 1% in a year from a savings ISA!
But yes, I do appreciated it can go the other way too. Interesting though...
This investing is dead easy with hindsight isn't it? All I need now is a time machine...
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