CV19 Investment Strategy - advice
Discussion
I’ll keep it short: new to investing. Have been poised to open a S&S ISA for 2-3 years but was advised / felt like FTSE was overvalued. Doing so in new tax year in a couple of weeks. Only investing what I don’t need and can afford to lose.
Timeframe: medium term, 5-20 years
Amount: surplus reserve lump sum (5-20k), drip feed thereafter
Strategy: invest and ignore
Tactics: three buckets
• 60% diversified ETFs with minimal AMC. Certainly not before FTSE hits c4500
• 20% hardy perennials whose values are suppressed e.g. Amazon, BP, Tesco, Alphabet etc
• 20% bargains who will survive their peers will not – based on having cash reserves/decent balance sheet. WHAT DO YOU SUGGEST HERE?
2 opinions: 1) I want to press go once the full impact of CV19 hits the unemployment numbers / some headline insolvencies. Assuming this will be the end of April. Central banks have turned on the taps and that’s stemming the bleeding for now - but this money will burn away quickly. 2) Returning waves will reduce confidence kicking the market when it is down. Assume a good time is when the 2nd waves hit China, US, etc.
Cheers
Timeframe: medium term, 5-20 years
Amount: surplus reserve lump sum (5-20k), drip feed thereafter
Strategy: invest and ignore
Tactics: three buckets
• 60% diversified ETFs with minimal AMC. Certainly not before FTSE hits c4500
• 20% hardy perennials whose values are suppressed e.g. Amazon, BP, Tesco, Alphabet etc
• 20% bargains who will survive their peers will not – based on having cash reserves/decent balance sheet. WHAT DO YOU SUGGEST HERE?
2 opinions: 1) I want to press go once the full impact of CV19 hits the unemployment numbers / some headline insolvencies. Assuming this will be the end of April. Central banks have turned on the taps and that’s stemming the bleeding for now - but this money will burn away quickly. 2) Returning waves will reduce confidence kicking the market when it is down. Assume a good time is when the 2nd waves hit China, US, etc.
Cheers
Edited by leitmotiv on Thursday 26th March 19:28
leitmotiv said:
I’ll keep it short: new to investing. Have been poised to open a S&S ISA for 2-3 years but was advised / felt like FTSE was overvalued. Doing so in new tax year in a couple of weeks. Only investing what I don’t need and can afford to lose.
Timeframe: medium term, 5-20 years
Amount: surplus reserve lump sum (5-20k), drip feed thereafter
Strategy: invest and ignore
Tactics: three buckets
• 60% diversified ETFs with minimal AMC. Aim to press go once full impact on unemployment hits – probably end of April. Central banks have turned on the taps and that’s stemming the bleeding for now… but in 6 weeks time when the 2nd wave hits China and unemployment numbers hit. Certainly not before FTSE hits c4500
• 20% hardy perennials whose values are suppressed e.g. Amazon, BP, Tesco, Alphabet etc
• 20% bargains who will survive their peers will not – based on having cash reserves/decent balance sheet. WHAT DO YOU SUGGEST HERE?
Cheers
Where do you think your edge lies compared to professionals with vastly superior resources?Timeframe: medium term, 5-20 years
Amount: surplus reserve lump sum (5-20k), drip feed thereafter
Strategy: invest and ignore
Tactics: three buckets
• 60% diversified ETFs with minimal AMC. Aim to press go once full impact on unemployment hits – probably end of April. Central banks have turned on the taps and that’s stemming the bleeding for now… but in 6 weeks time when the 2nd wave hits China and unemployment numbers hit. Certainly not before FTSE hits c4500
• 20% hardy perennials whose values are suppressed e.g. Amazon, BP, Tesco, Alphabet etc
• 20% bargains who will survive their peers will not – based on having cash reserves/decent balance sheet. WHAT DO YOU SUGGEST HERE?
Cheers
Garibaldi_red said:
leitmotiv said:
None. Just seeking advice.
Don’t pretend that you know more than you do.Keep it simple.
Index investments.
Drip feed, don’t try and time the market.
Vanguard LSx (x=20/40/60/80/100 according to your risk profile) or IM Index x (similar design, lower costs, someone smart to speak to - see sticky thread).
No need to wait for new tax year: dump whatever you can in TODAY and leave in cash if you don't want to pick a fund yet - you can certainly do this with IM.
Then repeat for new tax year....then pick your own time to move into the funds - the cash is all effectively tax-wrapped.
Not important if you are only popping a few grand in, but if you want to get towards the 20K pa limit, that's what I would do.
I personally like the options within IM....& you can split between many funds (for example, 30% in IM Index 80, 30% in IM Optimum Growth then 40% in PH Equity)....& they are a decent bunch to speak with too, which you just don't get with Vanguard.
& clearly other options are available: it's a big world out there!!
mikeiow said:
Vanguard LSx (x=20/40/60/80/100 according to your risk profile) or IM Index x (similar design, lower costs, someone smart to speak to - see sticky thread).
I wasn't aware IM was cheaper - LS is 39-41 bps all in (maximum, with a cap on the platform costs)
https://www.vanguardinvestor.co.uk/content/documen...
I wouldn't say the portfolios are that similar either - not to say one is better than the other but the bond constituents are very different in terms of volatility so not really comparable. You need to be aware whichever option you choose.
mikeiow said:
Agreed.
Vanguard LSx (x=20/40/60/80/100 according to your risk profile) or IM Index x (similar design, lower costs, someone smart to speak to - see sticky thread).
No need to wait for new tax year: dump whatever you can in TODAY and leave in cash if you don't want to pick a fund yet - you can certainly do this with IM.
Then repeat for new tax year....then pick your own time to move into the funds - the cash is all effectively tax-wrapped.
Not important if you are only popping a few grand in, but if you want to get towards the 20K pa limit, that's what I would do.
I personally like the options within IM....& you can split between many funds (for example, 30% in IM Index 80, 30% in IM Optimum Growth then 40% in PH Equity)....& they are a decent bunch to speak with too, which you just don't get with Vanguard.
& clearly other options are available: it's a big world out there!!
Thanks for your help, appreciatedVanguard LSx (x=20/40/60/80/100 according to your risk profile) or IM Index x (similar design, lower costs, someone smart to speak to - see sticky thread).
No need to wait for new tax year: dump whatever you can in TODAY and leave in cash if you don't want to pick a fund yet - you can certainly do this with IM.
Then repeat for new tax year....then pick your own time to move into the funds - the cash is all effectively tax-wrapped.
Not important if you are only popping a few grand in, but if you want to get towards the 20K pa limit, that's what I would do.
I personally like the options within IM....& you can split between many funds (for example, 30% in IM Index 80, 30% in IM Optimum Growth then 40% in PH Equity)....& they are a decent bunch to speak with too, which you just don't get with Vanguard.
& clearly other options are available: it's a big world out there!!
Garibaldi_red said:
Where do you think your edge lies compared to professionals with vastly superior resources?
In the unprecedented environment we currently find ourselves in, does their experience & resources actually count for much? Not to mention the constraints they must be under.Derek Chevalier said:
mikeiow said:
Vanguard LSx (x=20/40/60/80/100 according to your risk profile) or IM Index x (similar design, lower costs, someone smart to speak to - see sticky thread).
I wasn't aware IM was cheaper - LS is 39-41 bps all in (maximum, with a cap on the platform costs)
https://www.vanguardinvestor.co.uk/content/documen...
I wouldn't say the portfolios are that similar either - not to say one is better than the other but the bond constituents are very different in terms of volatility so not really comparable. You need to be aware whichever option you choose.
It is not if you go direct to Vanguard (we are 0.17% more for IM Index) but it lower cost is if you use another platform, such as Hargreaves Lansdown.
Vanguard LS is very different to IM Index, as you rightly point out. Vanguard LS has a UK bias with equities where as IM Index "buys the world".
Vanguard has a global bond exposure whereby IM is UK biased here.
This has led to IM outperforming Vanguard on equities in rising markets and also outperforming them with our bond approach in falling markets (IM Index 20 and Index 40 are not even down since peak at 21st Feb, whereas Vanguard LS 20 and 40 both are).
So you are right to point out the differences and I would second you when you highlight that neither approach is right or wrong, just different (and with different levels of volatility).
JulianPH said:
Derek Chevalier said:
mikeiow said:
Vanguard LSx (x=20/40/60/80/100 according to your risk profile) or IM Index x (similar design, lower costs, someone smart to speak to - see sticky thread).
I wasn't aware IM was cheaper - LS is 39-41 bps all in (maximum, with a cap on the platform costs)
https://www.vanguardinvestor.co.uk/content/documen...
I wouldn't say the portfolios are that similar either - not to say one is better than the other but the bond constituents are very different in terms of volatility so not really comparable. You need to be aware whichever option you choose.
It is not if you go direct to Vanguard (we are 0.17% more for IM Index) but it lower cost is if you use another platform, such as Hargreaves Lansdown.
Vanguard LS is very different to IM Index, as you rightly point out. Vanguard LS has a UK bias with equities where as IM Index "buys the world".
Vanguard has a global bond exposure whereby IM is UK biased here.
This has led to IM outperforming Vanguard on equities in rising markets and also outperforming them with our bond approach in falling markets (IM Index 20 and Index 40 are not even down since peak at 21st Feb, whereas Vanguard LS 20 and 40 both are).
So you are right to point out the differences and I would second you when you highlight that neither approach is right or wrong, just different (and with different levels of volatility).
Global (quality) bonds were down 5.8% during the period
Equities ditto
Inflation linked gilts 17.5%
https://www.deccanherald.com/business/uk-bonds-on-...
I saw some total return funds falls 20% in the same time, so a brutal week, but my point is that as long as people are aware of the inherent risks in any investment (and everything has a downside) then it's horses for courses.
DaveCWK said:
Garibaldi_red said:
Where do you think your edge lies compared to professionals with vastly superior resources?
In the unprecedented environment we currently find ourselves in, does their experience & resources actually count for much? Not to mention the constraints they must be under.Derek Chevalier said:
DaveCWK said:
Garibaldi_red said:
Where do you think your edge lies compared to professionals with vastly superior resources?
In the unprecedented environment we currently find ourselves in, does their experience & resources actually count for much? Not to mention the constraints they must be under.
No idea what specific “constraints” Dave meant, mind you....not being able to get to a physical office, maybe staff sick etc?
BTW, when I likened LS to IM index, I wasn’t trying to say they were identical, just a very similar easy-to-understand structure. Julian has clarified re costs. I personally prefer a less UK and more Global index to “spread the load to deliver” (remember I am a fan of Lars Kroijer!!), but that is just my view!
mikeiow said:
Derek Chevalier said:
DaveCWK said:
Garibaldi_red said:
Where do you think your edge lies compared to professionals with vastly superior resources?
In the unprecedented environment we currently find ourselves in, does their experience & resources actually count for much? Not to mention the constraints they must be under.No idea what specific “constraints” Dave meant, mind you....not being able to get to a physical office, maybe staff sick etc?
BTW, when I likened LS to IM index, I wasn’t trying to say they were identical, just a very similar easy-to-understand structure. Julian has clarified re costs. I personally prefer a less UK and more Global index to “spread the load to deliver” (remember I am a fan of Lars Kroijer!!), but that is just my view!
1.between being an expert in marketing and selling a commoditised product giving people the belief that you have the secret sizzle and can outperform. actually delivering on it.
The last manager in the latter camp was arguably Peter Lynch decades ago.
Experts (in terms of markets, not marketing) are, IMO, firms such as
https://en.wikipedia.org/wiki/D._E._Shaw_%26_Co.
https://en.wikipedia.org/wiki/Two_Sigma
https://en.wikipedia.org/wiki/Renaissance_Technolo...
And even the best brains sometimes struggle at times like this when correlations tend to go to 1.
Regarding the UK bias of LS, don't forget it's trivial to roll your own global equivalent, rebalancing periodically.
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