How do I become investment literate?

[Phooey]

Wombat3 said:

I'm looking into Fishers at the moment.

Fisher Investments? Big player but looking at some comments on various forums reviews don't look too hot.

[xeny]

Wombat3 said:

What's the general view on wealth managers who can take on SIPPs, ISAs, equities etc & invest it globally? Obviously there are fees to pay but against that they are able to invest In ways and with a spread of risk that would be difficult for the average individual to achieve.

Remember SIPPs and ISAs are wrappers - equities and other assets are investments that live in them.

When considering this think about levels of asset correlation as well as levels of fees. If everything you're diversified into still moves together to some extent then the fees you've spent to spread that risk haven't gained you as much as you might have hoped, so look at the historical behaviour of the assets they invest across, say across 2007-2009 as a handy historical stress test.

[Wombat3]

xeny said:

Wombat3 said:

What's the general view on wealth managers who can take on SIPPs, ISAs, equities etc & invest it globally? Obviously there are fees to pay but against that they are able to invest In ways and with a spread of risk that would be difficult for the average individual to achieve.

Remember SIPPs and ISAs are wrappers - equities and other assets are investments that live in them.

When considering this think about levels of asset correlation as well as levels of fees. If everything you're diversified into still moves together to some extent then the fees you've spent to spread that risk haven't gained you as much as you might have hoped, so look at the historical behaviour of the assets they invest across, say across 2007-2009 as a handy historical stress test.

Fishers definitely got it wrong in 2008 & they seem to be acutely aware of that! (but also were not alone I think). Since then they appear to have done relatively well (14+ % last year after fees). That's significantly better than my existing pension funds managed. The fees are higher than the existing pensions - but not multiples thereof. I need to research the levels of performance that a number of these kind of operators have achieved.

Understand the wrapper/investment thing. I don't know yet how other similar services operate but as I understand it what happens with Fishers is that what you hold (within whichever wrapper) are units of the Fisher investment fund (for what of a better term). That fund is then invested globally (ISTR only around 6% of it is in the UK ATM). A lot of what they are managing are corporate pension funds.

[JulianPH]

xeny said:

Wombat3 said:

What's the general view on wealth managers who can take on SIPPs, ISAs, equities etc & invest it globally? Obviously there are fees to pay but against that they are able to invest In ways and with a spread of risk that would be difficult for the average individual to achieve.

Remember SIPPs and ISAs are wrappers - equities and other assets are investments that live in them.

When considering this think about levels of asset correlation as well as levels of fees. If everything you're diversified into still moves together to some extent then the fees you've spent to spread that risk haven't gained you as much as you might have hoped, so look at the historical behaviour of the assets they invest across, say across 2007-2009 as a handy historical stress test.

You are absolutely correct. Equities, bonds, property, etc. They are all assets. SIPPs and ISAs are simply tax wrappers/allowances.

There are, however, many investment managers that offer their portfolio management services within their own SIPP and ISA wrappers at no additional charge.

This can give you the best of both worlds as the investment management is based purely on asset allocation (the major driving factor) but is conducted in the most tax efficient manner.

[Wombat3]

JulianPH said:

xeny said:

Wombat3 said:

What's the general view on wealth managers who can take on SIPPs, ISAs, equities etc & invest it globally? Obviously there are fees to pay but against that they are able to invest In ways and with a spread of risk that would be difficult for the average individual to achieve.

Remember SIPPs and ISAs are wrappers - equities and other assets are investments that live in them.

When considering this think about levels of asset correlation as well as levels of fees. If everything you're diversified into still moves together to some extent then the fees you've spent to spread that risk haven't gained you as much as you might have hoped, so look at the historical behaviour of the assets they invest across, say across 2007-2009 as a handy historical stress test.

You are absolutely correct. Equities, bonds, property, etc. They are all assets. SIPPs and ISAs are simply tax wrappers/allowances.

There are, however, many investment managers that offer their portfolio management services within their own SIPP and ISA wrappers at no additional charge.

This can give you the best of both worlds as the investment management is based purely on asset allocation (the major driving factor) but is conducted in the most tax efficient manner.

That's what Fishers do AIUI

[Manners2001]

OP - I'm in a similiar position to you in that I too would like to become more financially savvy and build 'wealth' (for both my wife and me and also as a legacy for daughter/any other children that may appear!) rather than purely relying on income from salaries. I'm slightly younger than you however at 33 yrs old but the wife and I both earn c. £100k p/a and rely solely on salaries for income.

I have read this topic and the replies with interest. It does highlight the problem I have been having and which has erred me to a standstill. There is such a varied view on what is right or wrong and then how to go about it.

However, the overlying message seems to be to do 'something' - start somewhere, however small and keep going incrementally. I also thought the comment about working out what your intended destination is for your journey (for me it's retirement at 55) and working back from there was strong, sensible advice.

So Op, good luck! If I make any inroads into my own journey (definitely no X-Factor type tears or dramatics intended) - I shall post and share..... Now where is my old Building Society savings book hiding?!

[Harry Flashman]

This thread is so, so useful: thanks so much to everyone contributing. Given me a lot of stuff to research.

I think I am going to keep my old HL account, simply as it means I get some analysis. I have yet to fillup this year's ISA allowance (a massive house renovation put paid to that!) but will probably put in whatever I can before April, just to wrap whatever I can from tax.

Next year, in May, I receive a bunch of SAYE shares. I am trying to find an ISA provider to put these into - ultimately I would like to trade out of some of them every month and reinvest. I have contacted Vanguard and Moneyfarm, as at this stage, I think I would like low cost funds. Moneyfarm is a bit more actively managed than Lifestrategy, it seems. Still deciding between the two. I am a bit wary of going in now as equities are so pricey, but to not do so means I am attempting to time the market - and could end up doing so for years.

Anyone transferred SAYE shares to an ISA? Who did you use?

[RL17]

Look at costs of monthly sales verses one/two or three sales. Assume you save max amount in SAYE ( as its a no loose option for the 3 or 5 year period).

Because of job, maturing SAYE and ongoing SAYE savings you already have quite a lot of risk with one company/organisation.

The matured SAYE shares mean you already in the market and subject to some market risk on those - so I'm not sure of the merit in drip feeding from other investments - unless you want to try a range of different investments over time.

Have held/sold SAYE shares in past but not transferred into an ISA. Thought they normally sold and then rebought shares within ISA when transfer shares to an ISA from non ISA account with same provider (HK does but only charges one buy/sell fee instead of two). Depending on the buy/sell spread on the shares the cost saving maybe £10 odd.

Transferring those shares to a platform may limit your choice (i.e. away from some low cost Vanguard type platforms if investments are limited), as would gradual sales - so consider what you want to invest in and then sell if transfers and gradual sales work (and at what cost).

Might be easier to sell SAYE shares and either invest cash in one go or then drip feed cash if concerned over market falls.

[Harry Flashman]

I think direct transfer into an ISA within 90 days means no tax. Realising the cash means that I'll be liable for CGT I think:

https://www.gov.uk/tax-employee-share-schemes/tran...

[RL17]

Harry Flashman said:

I think direct transfer into an ISA within 90 days means no tax. Realising the cash means that I'll be liable for CGT I think:

https://www.gov.uk/tax-employee-share-schemes/tran...

Does seem mean that they changed rules to catch the gain they exempt from income tax under CGT, but you get £11,300 of gains this 17/18 tax year (similiar amount next tax year).

Can see Barclayssmartinvestor covers transfers into ISA.

[trowelhead]

Thanks all for the great recommendation "how to own the world" - just finished it and very enjoyable read and informative.

Does anyone have any further reading on recommended funds to achieve the portfolios suggested

I see they have a screenshot here showing various funds in a HL account:

https://plainenglishfinance.co.uk/how-to-own-the-w...

My current isa is 100% in fundsmith, does this give enough global diversification?

I'd rather add stuff monthly from now on to rebalance, rather than selling holdings (add some gold, silver, bond funds, other equity trackers etc)

Wondering if it is worth joining their community for specific advice?

[trowelhead]

Also, with regards to the asset allocation...

If you have cash savings elsewhere, assuming no need to take up valuable isa allowance with cash holdings?

If you have real estate investments, any use in holding bonds?

Just wondering if it is worth using my isa purely for stocks and commodities, maybe hold physical gold outside an isa and cash outside isa, with private real estate acting as a bond proxy?

[bitchstewie]

This is what I've done so far with my ISA, not suggesting it's a good example but:

Lindsell Train Global Equity
Fundsmith
RIT Capital Partners
Scottish Mortgage Trust
Baillie Gifford Shin Nippon
Capital Gearing Trust
F&C Global Smaller Companies

A long way away from the "cheap global tracker" but it's year one of many.

Go here to see how your portfolio is comprised and distributed http://tools.morningstar.co.uk/uk/xray/editholding...

[trowelhead]

bhstewie said:

This is what I've done so far with my ISA, not suggesting it's a good example but:

Lindsell Train Global Equity
Fundsmith
RIT Capital Partners
Scottish Mortgage Trust
Baillie Gifford Shin Nippon
Capital Gearing Trust
F&C Global Smaller Companies

A long way away from the "cheap global tracker" but it's year one of many.

Go here to see how your portfolio is comprised and distributed http://tools.morningstar.co.uk/uk/xray/editholding...

Interesting, thanks.

I have been looking at a few of those funds myself over the years, especially scottish mortgage (especially like the future forward looking exposure to tencent etc) and RIT capital partners

Do you have a fairly equal split? No bonds or commodities?

As much as i "get" the argument (from the likes of lars kroijer mentioned elsewhere) about sticking to broad index investing, there is still a large part of me that believes such companies as alibaba tencent paypal will vastly outperform old school companies with dying business models, hence i'm more drawn to good funds like the above rightly or wrongly.

Picking funds also adds a layer of passion / interest. I worry with sticking to lumping it into one vanguard fund for 20+ years that my interest will dwindle and it's just too "dull", working with my own psychology, having an amount added to my ISA monthly then getting to allocate that is more rewarding - even if not optimal in the long run...

[bitchstewie]

trowelhead said:

Interesting, thanks.

I have been looking at a few of those funds myself over the years, especially scottish mortgage (especially like the future forward looking exposure to tencent etc) and RIT capital partners

Do you have a fairly equal split? No bonds or commodities?

As much as i "get" the argument (from the likes of lars kroijer mentioned elsewhere) about sticking to broad index investing, there is still a large part of me that believes such companies as alibaba tencent paypal will vastly outperform old school companies with dying business models, hence i'm more drawn to good funds like the above rightly or wrongly.

Picking funds also adds a layer of passion / interest. I worry with sticking to lumping it into one vanguard fund for 20+ years that my interest will dwindle and it's just too "dull", working with my own psychology, having an amount added to my ISA monthly then getting to allocate that is more rewarding - even if not optimal in the long run...

The psychology part is something I can relate to. The Lars Kroijer stuff makes perfect sense and I've got the book and watched the videos but did something else

The intention is that the split will be reasonably equal, but again it's early days so it can be changed.

My view was that RIT and Capital Gearing is the chunk of "stuff" that mere mortals like you and I can't go and buy directly so it takes the place of having to obsess too much around the things you mentioned.

[trowelhead]

bhstewie said:

trowelhead said:

Interesting, thanks.

I have been looking at a few of those funds myself over the years, especially scottish mortgage (especially like the future forward looking exposure to tencent etc) and RIT capital partners

Do you have a fairly equal split? No bonds or commodities?

As much as i "get" the argument (from the likes of lars kroijer mentioned elsewhere) about sticking to broad index investing, there is still a large part of me that believes such companies as alibaba tencent paypal will vastly outperform old school companies with dying business models, hence i'm more drawn to good funds like the above rightly or wrongly.

Picking funds also adds a layer of passion / interest. I worry with sticking to lumping it into one vanguard fund for 20+ years that my interest will dwindle and it's just too "dull", working with my own psychology, having an amount added to my ISA monthly then getting to allocate that is more rewarding - even if not optimal in the long run...

The psychology part is something I can relate to. The Lars Kroijer stuff makes perfect sense and I've got the book and watched the videos but did something else

The intention is that the split will be reasonably equal, but again it's early days so it can be changed.

My view was that RIT and Capital Gearing is the chunk of "stuff" that mere mortals like you and I can't go and buy directly so it takes the place of having to obsess too much around the things you mentioned.

Yep i see the argument with his work, i'm sure he knows alot better than me, but it's a bit like saying "don't start a business, if it was that good an idea someone else would have done it"

I was listening to moneyweek podcast and Merryn Somerset Webb was going on about in the 70s when the market crashed 70+% - saying effectively index investors would have been screwed at that time, whereas perhaps its during the bad times where a good defensive active manager would add value... (a bit like letting agents with rental property, looks like money for nothing when everything is going as it should, but it's when a tenant stops paying or there are issues where they earn their keep)

Does anyone have thoughts on the harry brown permanent portfolio approach?

[bitchstewie]

I always thought cash is something people keep anyway though not necessary inside the S&S portfolio?

Gold, I'll defer to others but be clear if what you're looking at is physical gold/metals or mining i.e. Blackrock Gold and General is massively invested in mining.

[trowelhead]

bhstewie said:

I always thought cash is something people keep anyway though not necessary inside the S&S portfolio?

Gold, I'll defer to others but be clear if what you're looking at is physical gold/metals or mining i.e. Blackrock Gold and General is massively invested in mining.

Yeah thats my question really, when you see a suggested allocation of for example 60% stocks 20% bonds 10% cash 5% RE 5% gold (for example) - then does that all have to sit within an isa, or can you count cash elsewhere (eg current account/savings) - probably a daft question really as i imagine you can. I just don't see why all these portfolios recommend having X in cash, is that just used as a buffer?

And when they say hold X% cash - is there a better way to have it invested than just sitting there earning 0% (perhaps some type of money market / short bond type fund?

Oh and when i refer to gold, i mean holding physical gold (as hedge against inflation) either via bullionvault or some kind of physical gold etf.

[bitchstewie]

I've seen plenty of suggestions of the "cash" holding just being NS&I or a suitable savings account.

I think the point is basically let's say you have £100k.

If you make sure you keep 25% available as "cash" you should have a suitable buffer is everything else goes to st.

There's also the argument that if everything else goes to st cash is good as you can buy more from those who panic and sell as they don't have cash to wait it out.

[bitchstewie]

What do people consider a "reasonable rate of return" if they don't have a fixed goal in mind?

I know if you're chasing greater rewards there are greater risks so it isn't a one size fits all answer - but I'm interested along with any supporting info you're happy to provide.