Investing your money

andy1234uk said:
Low cost index trackers. Check out vanguard life strategy 100.
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I always think index trackers are a bit of a cop out for fund managers. All they need to do is invest in the companies that make up the index which doesn't take a great deal of skill. I'd be more inclined to invest in a fund that consistently outperforms its relevant index, thereby using the expertise of someone who knows what they're doing.
As an example, the FTSE-100 has less than trebled in 25 years whereas I would have reasonably expected an average investment to have gone up at least five fold in that period. Also it has had some huge fluctuations and I would hope any fund I invest in wouldn't follow the downward swings to the same extent as the index whilst taking as much advantage of the upswings as possible. All this takes skill which you don't get from investing in a tracker.
 
bobmcfc said:
Can you explain this more. I looked but wasn’t sure how much I had to pay in each month etc. @SWP's back , would you recommend it ?
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A bit of spare cash, my not so great pension and the desire to retire early led me on this path....

Passive Investing is what Low Cost Index Trackers are all about, that is to maximise returns over the long run whilst involving little effort or management on your part. Perfect to put away, check annually or bi-annually. I am investing in this for a minimum of 20-25 years. This is an investment for 5+ years minimum.

Low Cost Index Trackers are essentially funds that follow the the top 100 companies in the world, aswell as emerging markets and other countries. Instead of investing in 1 company, these Index Trackers are spread all over and have fingers in all pies, housing, banking, medical, tech, etc. So your investment is spread out amongst the whole market and not reliant on 1 company. The Low Cost Index Trackers Funds (Vanguard Lifestrategy for example - there are hundreds of others) are managed funds, so someone is in charge of this fund and is balancing it, so that when a market starts to dip, they move the funds or when the balance of your fund goes off course. This person is constantly balancing and managing the fund, for this you pay a nominal yearly fee that comes off your earnings, its like 0.020% or something, I can't remember off the top of my head.

Your Low Cost Index Tracker Fund can either be Accumulation (Acc) or Income (Inc). Accumulation will add anything you make back into the fund, all still under the governments tax free allowance. Investing it back into the fund helps you benefit from Compound Interest and is seen as the preferable of the two when investing for retirement or long periods. If you choose Income, then dividends will be paid to you, tax free, at certain periods and your initial investment amount will remain invested in the fund.

You can take your money out at any point. I think you need a minimum of £500 to open the ISA and you can invest any amount each month, just don't go over your tax free limit for the year. 2 Schools of thought when investing are drip feeding monthly or lump sum; you'll have to check the pros and cons of each.

The only other fee you should incurr is the fee for using platform for your ISA, but again, this is nominal. (Some are percentage based and some are fixed rate, see which is cheapest for you)

I can only use Vanguard as the example so feel free to check for others as it has a UK Bias but they go something like this:

Vanguard Lifestrategy 100 (100 Stocks and Shares)
Vanguard Lifestrategy 80 (80% Stocks and shares, 20% Bonds)
Vanguard Lifestrategy 60 (60% Stocks and shares, 40% Bonds)
Vanguard Lifestrategy 40 (400% Stocks and shares, 60% Bonds)
Vanguard Lifestrategy 20 (20% Stocks and shares, 80% Bonds)

The idea is that you start at 100, then as you progress over the years and get nearer to Retirement you then drop to less Stocks and Shares and more bonds, this will limit your exposure to the market.

If you want to learn more about this stuff, check out UK Personal Finance sub on Reddit, the place is a mine for free financial advice on everything! I picked up most of this from there and Tim Hales Smarter Investing.

Warren Buffet and some geezer had a bet for $1 million over 10 years that an Index Tracker would out-perform Active Investing, he won.
 
andy1234uk said:
A bit of spare cash, my not so great pension and the desire to retire early led me on this path....

Passive Investing is what Low Cost Index Trackers are all about, that is to maximise returns over the long run whilst involving little effort or management on your part. Perfect to put away, check annually or bi-annually. I am investing in this for a minimum of 20-25 years. This is an investment for 5+ years minimum.

Low Cost Index Trackers are essentially funds that follow the the top 100 companies in the world, aswell as emerging markets and other countries. Instead of investing in 1 company, these Index Trackers are spread all over and have fingers in all pies, housing, banking, medical, tech, etc. So your investment is spread out amongst the whole market and not reliant on 1 company. The Low Cost Index Trackers Funds (Vanguard Lifestrategy for example - there are hundreds of others) are managed funds, so someone is in charge of this fund and is balancing it, so that when a market starts to dip, they move the funds or when the balance of your fund goes off course. This person is constantly balancing and managing the fund, for this you pay a nominal yearly fee that comes off your earnings, its like 0.020% or something, I can't remember off the top of my head.

Your Low Cost Index Tracker Fund can either be Accumulation (Acc) or Income (Inc). Accumulation will add anything you make back into the fund, all still under the governments tax free allowance. Investing it back into the fund helps you benefit from Compound Interest and is seen as the preferable of the two when investing for retirement or long periods. If you choose Income, then dividends will be paid to you, tax free, at certain periods and your initial investment amount will remain invested in the fund.

You can take your money out at any point. I think you need a minimum of £500 to open the ISA and you can invest any amount each month, just don't go over your tax free limit for the year. 2 Schools of thought when investing are drip feeding monthly or lump sum; you'll have to check the pros and cons of each.

The only other fee you should incurr is the fee for using platform for your ISA, but again, this is nominal. (Some are percentage based and some are fixed rate, see which is cheapest for you)

I can only use Vanguard as the example so feel free to check for others as it has a UK Bias but they go something like this:

Vanguard Lifestrategy 100 (100 Stocks and Shares)
Vanguard Lifestrategy 80 (80% Stocks and shares, 20% Bonds)
Vanguard Lifestrategy 60 (60% Stocks and shares, 40% Bonds)
Vanguard Lifestrategy 40 (400% Stocks and shares, 60% Bonds)
Vanguard Lifestrategy 20 (20% Stocks and shares, 80% Bonds)

The idea is that you start at 100, then as you progress over the years and get nearer to Retirement you then drop to less Stocks and Shares and more bonds, this will limit your exposure to the market.

If you want to learn more about this stuff, check out UK Personal Finance sub on Reddit, the place is a mine for free financial advice on everything! I picked up most of this from there and Tim Hales Smarter Investing.

Warren Buffet and some geezer had a bet for $1 million over 10 years that an Index Tracker would out-perform Active Investing, he won.
Click to expand...
Thanks for all the information
 
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