Jack Bogle (Vanguard): The man who pioneered index investing
Discussion
If like me you still don't know whether you're doing right by paying a financial advisor to invest your money, or unsure exactly how fees can impact your investments - take 30 mins out of your life to listen to this interview - https://www.bbc.co.uk/sounds/play/b081qyxh . It might just save you thousands of pounds.
Jack Bogle (Vanguard): The man who pioneered index investing. https://www.bbc.co.uk/news/business-46906246
With only a 5% chance of an active fund beating an index fund, the above interview has seriously got me thinking of going passive in 2019/20 with my £20k ISA allowance. Reason - I'm fed up of not understanding exactly what fees I am paying, and more importantly - the impact that low vs high fees have on compounding / growth. The only negative I have is that my FA is genuinely a really nice chap. I've known him for 15 years and I can't bring myself to say.. "I'm seeing someone else"
But seriously.. why do we use a FA? And who can honestly say their FA has added value over an index fund? And if your FA is one of the 5% that can beat index funds.. please pm me their contact details
Jack Bogle (Vanguard): The man who pioneered index investing. https://www.bbc.co.uk/news/business-46906246
With only a 5% chance of an active fund beating an index fund, the above interview has seriously got me thinking of going passive in 2019/20 with my £20k ISA allowance. Reason - I'm fed up of not understanding exactly what fees I am paying, and more importantly - the impact that low vs high fees have on compounding / growth. The only negative I have is that my FA is genuinely a really nice chap. I've known him for 15 years and I can't bring myself to say.. "I'm seeing someone else"
But seriously.. why do we use a FA? And who can honestly say their FA has added value over an index fund? And if your FA is one of the 5% that can beat index funds.. please pm me their contact details
Phooey said:
If like me you still don't know whether you're doing right by paying a financial advisor to invest your money, or unsure exactly how fees can impact your investments - take 30 mins out of your life to listen to this interview - https://www.bbc.co.uk/sounds/play/b081qyxh . It might just save you thousands of pounds.
Jack Bogle (Vanguard): The man who pioneered index investing. https://www.bbc.co.uk/news/business-46906246
With only a 5% chance of an active fund beating an index fund, the above interview has seriously got me thinking of going passive in 2019/20 with my £20k ISA allowance. Reason - I'm fed up of not understanding exactly what fees I am paying, and more importantly - the impact that low vs high fees have on compounding / growth. The only negative I have is that my FA is genuinely a really nice chap. I've known him for 15 years and I can't bring myself to say.. "I'm seeing someone else"
But seriously.. why do we use a FA? And who can honestly say their FA has added value over an index fund? And if your FA is one of the 5% that can beat index funds.. please pm me their contact details
A very sad day, and I think he personally did more than anyone to transform the investing landscape for the retail investor. It's also very fair to say that very little beats a well run index fund (some advisers do have access to funds such as Dimensional which have done so, but you must be prepared for potential long periods of underperformance).Jack Bogle (Vanguard): The man who pioneered index investing. https://www.bbc.co.uk/news/business-46906246
With only a 5% chance of an active fund beating an index fund, the above interview has seriously got me thinking of going passive in 2019/20 with my £20k ISA allowance. Reason - I'm fed up of not understanding exactly what fees I am paying, and more importantly - the impact that low vs high fees have on compounding / growth. The only negative I have is that my FA is genuinely a really nice chap. I've known him for 15 years and I can't bring myself to say.. "I'm seeing someone else"
But seriously.. why do we use a FA? And who can honestly say their FA has added value over an index fund? And if your FA is one of the 5% that can beat index funds.. please pm me their contact details
However, by far the most important point here is that you seem to be implying that
a). an adviser solely adds value by investing your money.
b). All advisers base their investment offering around active funds (and should be judged on picking the right ones (although I've no idea how anyone could do that))
If this is the case it may be worth reading more threads on here.
I'm seriously tempted to write a short ebook explaining all this.
BTW it should be clear what fees you are paying - where do you feel this isn't the case?
Presumably your advisor is providing a service worthy of 15 years and is looking after more than just your ISA allowance, maybe you have a portfolio of products/services..
By opting for a new investment strategy utilising lower cost passives you'd still want to be advised on which ones would be most suitable as there are literally thousands of options, although it is worth noting that Vanguard take a decent number of the top 10 funds of last year so I can completely understand why you'd go straight to them an cut out any middlemen!!. If you don't go direct & keep existing holdings within a wrapper/current isa provider, make sure they are working hard for their fees to.
By opting for a new investment strategy utilising lower cost passives you'd still want to be advised on which ones would be most suitable as there are literally thousands of options, although it is worth noting that Vanguard take a decent number of the top 10 funds of last year so I can completely understand why you'd go straight to them an cut out any middlemen!!. If you don't go direct & keep existing holdings within a wrapper/current isa provider, make sure they are working hard for their fees to.
Yeah, good points above. I only use my FA for my ISA (I do also have a pension with them but it is very small and I stopped paying into this in preference of my ISA years ago). So for me - I'm probably not getting value by paying an annual % charge to my FA.. just for my ISA. I have no complicated tax situations, but even then I'm not sure *my* FA would be the man for the job. No disrespect to him (or any other FA) but I think most FA's are just order takers / salesman taking a piece of the pie.
Also very good point above re taking advice on *which* index fund/s to pick. I guess that's why the Lifestrategy funds are so popular - just choose which 'risk' camp you are in and how long you invest for?
eta Derek - you should do that ebook
Also very good point above re taking advice on *which* index fund/s to pick. I guess that's why the Lifestrategy funds are so popular - just choose which 'risk' camp you are in and how long you invest for?
eta Derek - you should do that ebook
I like Index funds, as you can see if you can be bothered to read many posts I’ve made on them over the years, for the right reason and in the right place.
It’s worth noting that a lot of the research, and evidence, for their outperformance is provided by index fund providers and is not independent in its approach or thinking. Selective time periods and the like. So bear that in mind when making any decision.
Yes they’re cheaper, but there are many differing varieties and their index replication method can vary quite a bit. Be careful in selection, cheapest may not be the correct type for you.
Personally, I think for most people a mixture of both passive and active is probably correct depending on risk, objective and sector specifics etc.
It’s worth noting that a lot of the research, and evidence, for their outperformance is provided by index fund providers and is not independent in its approach or thinking. Selective time periods and the like. So bear that in mind when making any decision.
Yes they’re cheaper, but there are many differing varieties and their index replication method can vary quite a bit. Be careful in selection, cheapest may not be the correct type for you.
Personally, I think for most people a mixture of both passive and active is probably correct depending on risk, objective and sector specifics etc.
Hi mate, I trust all is good with you and yours.
A good financial adviser (such as Derek above) can add value by looking at the big picture, providing solutions for you needs (particularly ones you were previously unaware of) and managing your financial plans to achieve your goals as tax efficiently as possible.
There is little in the way they can add value in the running of your investments as they don't actually manage this money for you, they simply recommend a firm (or firms) that will do this for you.
You then have the product floggers who are simply trying to sell you something so they can add their fees on top and dressing it up as advice, but then never actually do anything raised in my first point. These are adding no value whatsoever for their fees.
So have a look at what your financial adviser does for you to see which camp you sit in, this may make the decision easier.
Like many on here I prefer a well run passive approach over an active one, but as has been said, you can achieve both of these either with advice or without it.
Pop over for a beer and a chat over this if you like. You know Where I live!
Cheers
A good financial adviser (such as Derek above) can add value by looking at the big picture, providing solutions for you needs (particularly ones you were previously unaware of) and managing your financial plans to achieve your goals as tax efficiently as possible.
There is little in the way they can add value in the running of your investments as they don't actually manage this money for you, they simply recommend a firm (or firms) that will do this for you.
You then have the product floggers who are simply trying to sell you something so they can add their fees on top and dressing it up as advice, but then never actually do anything raised in my first point. These are adding no value whatsoever for their fees.
So have a look at what your financial adviser does for you to see which camp you sit in, this may make the decision easier.
Like many on here I prefer a well run passive approach over an active one, but as has been said, you can achieve both of these either with advice or without it.
Pop over for a beer and a chat over this if you like. You know Where I live!
Cheers
ellroy said:
It’s worth noting that a lot of the research, and evidence, for their outperformance is provided by index fund providers and is not independent in its approach or thinking. Selective time periods and the like. So bear that in mind when making any decision.
I've yet to see any (robust) evidence that suggests active funds to any better during different time periods. There's lots of (what is hopefully) independent research out there which shows that, after costs, active funds underperform on average (SPIVA etc) - I can't see how it can be any other way as active funds make up a vast proportion of the market - where would they be getting their alpha from? #Of course, if you could identify the winning funds in advance this wouldn't be an issue, but I'm not sure how you would do that.
Always open to any data which shows the opposite.
ellroy said:
Yes they’re cheaper, but there are many differing varieties and their index replication method can vary quite a bit. Be careful in selection, cheapest may not be the correct type for you.
Very valid point.ellroy said:
Personally, I think for most people a mixture of both passive and active is probably correct depending on risk, objective and sector specifics etc
The only reason I could understand for doing this is if it was proven that active managers had an edge in certain markets (small cap, emerging markets etc), but all the (robust) evidence I've seen shows that once adjusted for factor tilts and volatility, the vast majority underperform their chosen benchmark. I happened to catch the to the Jack Bogle programme when driving, and the first thought that struck me was, 'They are comparing averages'. Who selects an active fund manager because he is average? Surely you do your research and look for one with a consistently better than average performance?
Of course fund managers can change companies or go off the boil, but if you bought the top ten funds from the previous year, how likely is it that none of them would be in the top ten in the following year?
Of course fund managers can change companies or go off the boil, but if you bought the top ten funds from the previous year, how likely is it that none of them would be in the top ten in the following year?
Edited by GliderRider on Sunday 20th January 19:20
GliderRider said:
I happened to catch the to the Jack Bogle programme when driving, and the first thought that struck me was, 'They are comparing averages'. Who selects an active fund manager because he is average? Surely you do your research and look for one with a consistently better than average performance?
Of course fund managers can change companies or go off the boil, but if you bought the top ten funds from the previous year, how likely is it that none of them would be in the top ten in the following year?
If you search in google for "persistence of fund outperformance" you can see how difficult/impossible it is to pick future putperforming funds. You also need to be very careful how you measure outperformance.Of course fund managers can change companies or go off the boil, but if you bought the top ten funds from the previous year, how likely is it that none of them would be in the top ten in the following year?
Edited by GliderRider on Sunday 20th January 19:20
JulianPH said:
Hi mate, I trust all is good with you and yours.
A good financial adviser (such as Derek above) can add value by looking at the big picture, providing solutions for you needs (particularly ones you were previously unaware of) and managing your financial plans to achieve your goals as tax efficiently as possible.
There is little in the way they can add value in the running of your investments as they don't actually manage this money for you, they simply recommend a firm (or firms) that will do this for you.
You then have the product floggers who are simply trying to sell you something so they can add their fees on top and dressing it up as advice, but then never actually do anything raised in my first point. These are adding no value whatsoever for their fees.
So have a look at what your financial adviser does for you to see which camp you sit in, this may make the decision easier.
Like many on here I prefer a well run passive approach over an active one, but as has been said, you can achieve both of these either with advice or without it.
Pop over for a beer and a chat over this if you like. You know Where I live!
Cheers
Hi Julian, all is good here thanks A good financial adviser (such as Derek above) can add value by looking at the big picture, providing solutions for you needs (particularly ones you were previously unaware of) and managing your financial plans to achieve your goals as tax efficiently as possible.
There is little in the way they can add value in the running of your investments as they don't actually manage this money for you, they simply recommend a firm (or firms) that will do this for you.
You then have the product floggers who are simply trying to sell you something so they can add their fees on top and dressing it up as advice, but then never actually do anything raised in my first point. These are adding no value whatsoever for their fees.
So have a look at what your financial adviser does for you to see which camp you sit in, this may make the decision easier.
Like many on here I prefer a well run passive approach over an active one, but as has been said, you can achieve both of these either with advice or without it.
Pop over for a beer and a chat over this if you like. You know Where I live!
Cheers
Hope same with you too mate!Appreciate the offer.. although doing dry Jan (actually hoping to do dry Feb & March too
) so I might be a bit boring 
I think I'm finally starting to get my head around the fees etc, and as Derek mentioned above - I think a bit of 'one-off' advice would be valuable for most.
Out of interest.. what would you choose in the Vanguard shop for the long term (10+ years) and a high risk (high - not reckless!) approach?
Phooey said:
Hi Julian, all is good here thanks Hope same with you too mate!
Appreciate the offer.. although doing dry Jan (actually hoping to do dry Feb & March too) so I might be a bit boring
Well you can bugger off then until you come to your senses! Hope same with you too mate!Appreciate the offer.. although doing dry Jan (actually hoping to do dry Feb & March too
) so I might be a bit boring Phooey said:
I think I'm finally starting to get my head around the fees etc, and as Derek mentioned above - I think a bit of 'one-off' advice would be valuable for most.
Out of interest.. what would you choose in the Vanguard shop for the long term (10+ years) and a high risk (high - not reckless!) approach?
I would go for their LifeStrategy 80% Equity Fund to keep some bond exposure as a hedge, or either their LifeStrategy 100% Equity or FTSE Global All Cap Index Fund if bond exposure didn't bother you.Out of interest.. what would you choose in the Vanguard shop for the long term (10+ years) and a high risk (high - not reckless!) approach?
Cheers matey!
JulianPH said:
Well you can bugger off then until you come to your senses!
haha, I know I know! I'm buckling already JulianPH said:
I would go for their LifeStrategy 80% Equity Fund to keep some bond exposure as a hedge, or either their LifeStrategy 100% Equity or FTSE Global All Cap Index Fund if bond exposure didn't bother you.
Cheers matey!
Ta mate. Any point in splitting my money between the 3 funds ^^^ you mention or would that be a bit daft Cheers matey!
Cheers
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