ETF Simple saving for Pension Investing

[appleyard]

Hi all, I'm 51, will probably retire by 60, have a reasonable appetite for risk, but like low cost, and have no interest in outperforming the market, happy to take a global view to investing, I'm on the ii trading platform.

I have a substantial cash lump sum to invest and looking to invest into 2-5 ETF's - have even thought about 60/40 Vanguard Life Strategy as a single fund. But its a little too expensive, and perhaps a tiny bit too safe. Want accumulating ETF's to keep things simple.

Thoughts welcome, and many thanks.

[Newroad]

Hi Appleyard.

Based on what you've said, why not start

60% VWRP
40% VAGS

Global equities and bonds respectively, accumulating, then adjust ratios and/or add other (riskier?) ETF's to tweak to preferences and risk?

Regards, Newroad

[DrFfybes]

As Newroad says...
VWRP and VAGP to suit your preferred split. Very easy to rebalance should you wish to.

An alternative to VWRP is the HSBC FTSE ALL World which has cumulatively outperformed VWRP by about 0.25% over 5 years. 0.12% fee as opposed to 0.22 with VWRP, ISIN is GB00BMJJJF91 so it is UK domiciled (only really a benefit in unsheltered investments, but not instantly tradeable.

Personally I'm not a fan of Bods or Gold, so I'd go with
60% VWRP
40% VWRP as well, but then change my mind at the last minute and buy some ATST and BRKB.

Paul

[Arborbridge]

As Newroad says...
VWRP and VAGP to suit your preferred split. Very easy to rebalance should you wish to.

An alternative to VWRP is the HSBC FTSE ALL World which has cumulatively outperformed VWRP by about 0.25% over 5 years. 0.12% fee as opposed to 0.22 with VWRP, ISIN is GB00BMJJJF91 so it is UK domiciled (only really a benefit in unsheltered investments, but not instantly tradeable.

Personally I'm not a fan of Bods or Gold, so I'd go with
60% VWRP
40% VWRP as well, but then change my mind at the last minute and buy some ATST and BRKB.

Paul

VWRP + VWRP = 2VWRP

[DrFfybes]

As Newroad says...
VWRP and VAGP to suit your preferred split. Very easy to rebalance should you wish to.

An alternative to VWRP is the HSBC FTSE ALL World which has cumulatively outperformed VWRP by about 0.25% over 5 years. 0.12% fee as opposed to 0.22 with VWRP, ISIN is GB00BMJJJF91 so it is UK domiciled (only really a benefit in unsheltered investments, but not instantly tradeable.

Personally I'm not a fan of Bods or Gold, so I'd go with
60% VWRP
40% VWRP as well, but then change my mind at the last minute and buy some ATST and BRKB.

Paul

VWRP + VWRP = 2VWRP

Yup, 100% Equities. As I said, not a fan of Bo(n)ds or Gold

For the last 30 years you could pretty much have bought at any time and be better off with 100% equities.

But my attitude to risk is different, and with a DB pension covering the essentials I can afford to be adventurous.

Paul

[Arborbridge]

VWRP + VWRP = 2VWRP

Yup, 100% Equities. As I said, not a fan of Bo(n)ds or Gold

For the last 30 years you could pretty much have bought at any time and be better off with 100% equities.

But my attitude to risk is different, and with a DB pension covering the essentials I can afford to be adventurous.

Paul

I'm confused, not about being 100% equities, but about why you mention VWRP twice as though they are two different ETFs.

[DrFfybes]

I'm confused, not about being 100% equities, but about why you mention VWRP twice as though they are two different ETFs.

It was an attempt at humour.

[Arborbridge]

I'm confused, not about being 100% equities, but about why you mention VWRP twice as though they are two different ETFs.

It was an attempt at humour.

An alternative to VWRP is the HSBC FTSE ALL World which has cumulatively outperformed VWRP


you were suggesting this.

[appleyard]

Thanks all - that's super advice - that should keep life simple. Will probably opt for the HSBC Tracker or VWRP

Final question - what's the best cash fund / ETF ? My broker accounts pays such a low interest rate - so what's the best way to hold a cash position?

[xxd09]

I am long retired and keep 2+ years living expenses in cash via…….
1) A high interest bank account (£1000 interest pa tax free for 20% tax payers) -holds £20000-£25000 depending on interest rates
2) Instant Access Cash ISAs are are used for the rest of the cash -£20000 per person pa
xxd09

[daveh]

II pay an Ok interest rate on their accounts. At the moment for money outside an ISA short dated low coupon gilts are still good. Coupon is very small so little or no income tax to pay. Most of the gain comes from the capital gain on maturity and no CGT on gilts. I own 5 with maturities between 2025 and 2031.

[ukmtk]

The ETF that I'm currently buying using monthly savings is V3AB.
It gives you the whole world in a low cost unit.
As some point out it has an ESG stance.
I'm 62 and mainly hold equities.

[Degsy67]

Thanks all - that's super advice - that should keep life simple. Will probably opt for the HSBC Tracker or VWRP

Final question - what's the best cash fund / ETF ? My broker accounts pays such a low interest rate - so what's the best way to hold a cash position?

I also hold the HSBC ETF as my world index tracker. Very happy with it.

Try CSH2 for a cash fund. Tracks SONIA relatively closely.

Degsy

[mc2fool]

Thanks all - that's super advice - that should keep life simple. Will probably opt for the HSBC Tracker or VWRP

Final question - what's the best cash fund / ETF ? My broker accounts pays such a low interest rate - so what's the best way to hold a cash position?

I also hold the HSBC ETF as my world index tracker. Very happy with it.

Try CSH2 for a cash fund. Tracks SONIA relatively closely.

Degsy

CSH2: Lyxor Smart Overnight Return - UCITS ETF C-GBP, and on a search I find...

(Hmmm ... Amundi bought out Lyxor from Société Générale? I must have missed that... )

https://www.amundietf.co.uk/en/professional/products/fixed-income/lyxor-smart-overnight-return-ucits-etf-cgbp/lu1230136894

So, an ETF "that aims to achieve short term returns higher than the benchmark rate Sonia with extremely low volatility.The fund is actively managed and invests in a diversified portfolio of financial instruments and repurchase agreements, in an environment of strict risk and liquidity monitoring."

But it's actual holdings are some 200+ mostly US very familiar companies, Amazon, Tesla, Apple, etc, but it's a synthetic replication ETF, comprising an "unfunded swap" with three French banks as the swap counterparties (Société Générale, Crédit Agricole, BNP Paribas).

Ok, takes all sorts, so (thinks) may be useful for mopping up ISA dividends until there's enough to make it worth buying something, so, (without having paid full attention to the info already in front of me) I log into IWeb to check if they have it available and discover .....

..... it's trading at £1,139.05 a share.

[scrumpyjack]

As Newroad says...
VWRP and VAGP to suit your preferred split. Very easy to rebalance should you wish to.

An alternative to VWRP is the HSBC FTSE ALL World which has cumulatively outperformed VWRP by about 0.25% over 5 years. 0.12% fee as opposed to 0.22 with VWRP, ISIN is GB00BMJJJF91 so it is UK domiciled (only really a benefit in unsheltered investments, but not instantly tradeable.

Personally I'm not a fan of Bods or Gold, so I'd go with
60% VWRP
40% VWRP as well, but then change my mind at the last minute and buy some ATST and BRKB.

Paul

If the HSBC ETF is UK domiciled, presumably you pay stamp duty on purchases? The advantage of the Irish domiciled ETFs, like most Vanguard and Ishares ones, is that there is no stamp duty on purchases.

[kernelthread]

If the HSBC ETF is UK domiciled, presumably you pay stamp duty on purchases? The advantage of the Irish domiciled ETFs, like most Vanguard and Ishares ones, is that there is no stamp duty on purchases.

The HSBC FTSE ALL World fund is an OEIC not an ETF, so no stamp duty.

..... it's trading at £1,139.05 a share.

Yes, that's a bit of a bummer. It could do with a 100:1 or even 1000:1 share split.
There's ERNS which looks like it does a similar job, although it pays a dividend every 6 months - the price seems to rise fairly linearly in between dividends. Also QUID, which pays a dividend every month, but yield is slightly lower (4.6% instead of 5.3%).

[Julian]

I agree with the people here leaning towards 100% equities, that's what I do, but that's an entirely personal decision related to risk tolerance and individual perceptions of bond/equity relative risk.

On the equity side of things another option to consider might be VHVG (Vanguard Developed World ETF - https://www.vanguardinvestor.co.uk/inve ... g/overview)

It doesn't have any emerging market component and the fee is 0.12% vs 0.22% for VWRP. Of course as noted the HSBC FTSE All World ETF also has a 0.12% fee but if for some reason you prefer Vanguard and/or don't want any EM component then VHVG (or its income-distributing non-accumulation version VEVE) might be an option for you.

- Julian

[mc2fool]

..... it's trading at £1,139.05 a share.

Yes, that's a bit of a bummer. It could do with a 100:1 or even 1000:1 share split.
There's ERNS which looks like it does a similar job, although it pays a dividend every 6 months - the price seems to rise fairly linearly in between dividends. Also QUID, which pays a dividend every month, but yield is slightly lower (4.6% instead of 5.3%).

Hmmm.... (CSH2 is acc whereas the others are inc, but even so....)


https://uk.advfn.com/stock-market/london/smart-cash-CSH2/share-price

[kempiejon]

I agree with the people here leaning towards 100% equities, that's what I do, but that's an entirely personal decision related to risk tolerance and individual perceptions of bond/equity relative risk.

On the equity side of things another option to consider might be VHVG (Vanguard Developed World ETF - https://www.vanguardinvestor.co.uk/inve ... g/overview)

It doesn't have any emerging market component and the fee is 0.12% vs 0.22% for VWRP. Of course as noted the HSBC FTSE All World ETF also has a 0.12% fee but if for some reason you prefer Vanguard and/or don't want any EM component then VHVG (or its income-distributing non-accumulation version VEVE) might be an option for you.

- Julian

For 2 or 3 years I have been earmarking marking gilts and corporate bonds with known redemption dates to release known amounts of cash for specific purposes or just letting cash accumulate from dividends to remove market risk off. Prior to that I was nigh on all equities. Rather than going global I too prefer the use of cheaper developed VHVG/VEVE (0.12% fee) to which one can add VFEG/VFEM (0.22% fee) for emerging markets. One can copy the VWRL/P (0.22% fee) balance (is it 85/15) of developed/emerging markets. It saves a few points in fees.

Worth reminding that for unsheltered holdings accumulating units can make tax calc a pain. I hear it's possible that Excess Reportable Income (ERI) can impact inc units too, I've not come across it and am all sheltered anyhow.

[GeoffF100]

If the HSBC ETF is UK domiciled, presumably you pay stamp duty on purchases?

As has already been said, it is an OEIC so not. UK domiciled ETFs also do not attract stamp duty, but there are none. Ireland captured the market before we removed the stamp duty. The UK and Ireland have better double taxation treaties than Luxembourg, so there is less withholding tax.