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Is now an ok time to move savings into investments?

Investment discussion for beginners. Why you should invest your money, get help getting started
TomKhakis
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Is now an ok time to move savings into investments?

#369993

Postby TomKhakis » December 27th, 2020, 2:43 am

Hi All, as will be obvious, I don't know much about investing. I've been putting money into a savings at the bank over the past few years, which at its peak was returning only a few quid per month, and has now dropped down to literally 25p return per month. I know that I need to move it into proper investments, but with Brexit looming, I fear putting moving my savings into investments and then seeing them dwindle. Is now an ok or good time to move my savings? Or should I wait? Or should I invest some now, and gradually move the remaining? (I got caught in the housing bubble back in 2007, buying at the very peak and then seeing values drop rapidly, so I don't want to make a similar mistake again.)

I'm guessing I'll use Vanguard's LifeStrategy, or perhaps Fidelity. I also have investments overseas in a roboinvesting company, Wealthfront, which wasn't doing very well in the past few years, but has started doing quite well during this past year. And then I have some also in Fidelity, and TIAA-Cref which is doing ok.

I appreciate any advice or opinions. Cheers

JohnB
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Re: Is now an ok time to move savings into investments?

#369995

Postby JohnB » December 27th, 2020, 7:09 am

The longer you are in the market the more money you are likely to make. Market timing is hard. If you are loss averse you could trickle the money in, but that would incur more dealing charges. Fees are the main thing you can control, so if you are going down the tracker route make sure you pick a broker with the right structure for your circumstances, percentage custody fee for small sums, capped for large sums.

If the sums you are going to invest are less than 50% of your investments, and you would not turn green if they dropped by 20% and took 2 years to recover, bung it all in one go.

Urbandreamer
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Re: Is now an ok time to move savings into investments?

#370025

Postby Urbandreamer » December 27th, 2020, 10:03 am

So many point's to make!

Ok in my, and many others, opinion the time to invest is ALWAYS now. However we have been doing it and are use to the idea. It is very different from saving. For one thing you have to get use to the fact that you can lose money as well as make it. In March/Apr I and almost everyone else lost some 40% of what they had invested. Those with a strong constitution who didn't sell have almost certainly regained their losses, I know that I have.

My records show that I've made an average of 7% a year since I started keeping good records. It has to be said that is not good or great, it's what I have managed with all my bad decisions.

Brexit? Is that something that will affect the USA or China? Indeed re-reading your post I see that you are already investing overseas. If you like passive investments then Vanguard is a good option. Lifestrategy? How old are you and how many financial shocks can you take? Personally I'd not wish the bond component of those funds. Then again I like stock picking and active investment. Each to their own. I understand that if you like Vanguard and are willing to limit your investments to them, they offer a cheap account. It's not for me though.

Currently I'm adding to my Pacific Horizon investment trust holding in my A J Bell SIPP. I seriously doubt that many of the companies that they, SMT or FCIT invest in will be affected by Brexit.

I have NO savings, though I do have cash in both my current account and brokers accounts. The effort of chasing fractions of a percent does not appeal to me. I'd rather spend the time reading the IC or listening to FT podcasts.

tjh290633
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Re: Is now an ok time to move savings into investments?

#370047

Postby tjh290633 » December 27th, 2020, 11:03 am

The secret is regular investing. You could start by stopping the Savings Bank and starting by investing in a share ISA (or two, if it's his and hers). Ideally choose one where you have a wide choice of investments and where the fees are low. I can't see much wrong with the Halifax's offering. Some restrict you to that manager's offerings, which may have low fees, but you are tied in.

The argument about trackers or passive, versus active management of funds, will continue for ever. Likewise the arguments about diversity, both geographical and in the types of asset. Personally I am against trackers, and prefer a DIY approach with individual shares. I did start over 60 years ago, however, and it was a long time before I ventured into individual shares, dropping the odd clanger on the way. Fixed interest investments, which are standing at a big premium to the redemption value, guarantee you a capital loss if you hold to redemption, so you need some income to offset that. In any case, they will lose out to inflation over time.

Start with collective investments in one form or another then, if you feel confident, start looking at individual share holdings. Some you win, some you lose. I have judged my performance largely by the dividend income that I can accumulate. Sometimes capital values overtake dividend growth. You learn by experience.

Good luck with whatever route you choose.

TJH

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Re: Is now an ok time to move savings into investments?

#370113

Postby vagrantbrain » December 27th, 2020, 2:37 pm

I don't think there's any right or wrong answer personally. The longer you're planning to invest for the less important any price movement after you buy would be - if you're looking to hold the investments for a couple of decades then a 10% or 20% drop in the short term would be miniscule in the long run. If you're concerned about investing all at once then i don't think there's anything wrong with investing it over 6-12 months, just be aware the dealing costs would be a bit higher than a single investment.

I think you could do a lot worse than a cheap global tracker, as someone else suggested, through Vanguard or Fidelity. You essentially get a diverse, global portfolio of companies which will produce the market return (less a fraction for costs) without you having to make decisions on sector or geographic allocation etc etc. If you're willing to be more hands-on then a portfolio of some of the larger Investment Trusts would be worth looking at. Without wishing to be condescending i'd stay away from anything too exotic or fashionable such as Japanese small cap or Chinese rare earth miners as a first investment as here be dragons and bad experiences can put people off stockmarket investing permanently.

AleisterCrowley
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Re: Is now an ok time to move savings into investments?

#370133

Postby AleisterCrowley » December 27th, 2020, 3:58 pm

I've been investing for about 20 years and have made lots of mistakes, but I'm still well up compared with cash in the bank earning interest (or not, these days)
A lot depends on your age, current financial situation, and risk tolerance
But -a regular automatic investment into a cheap index tracker is probably the best way to invest for most people, most of the time
There's a lot of evidence that the majority of actively managed funds fail to beat the market , and there's no way to pick the outperformers in advance

use your ISA allowance
keep total costs low - they can have a big impact over time even if the percentages look small

Have a look at the Monevator site - lots of good stuff on there.
https://monevator.com/category/investin ... investing/
(article links at the bottom of the post)

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Re: Is now an ok time to move savings into investments?

#370166

Postby jackdaww » December 27th, 2020, 6:05 pm

...



some ideas for passive(ETF) and active (IT) -- not recommendations DYOR !

ETF's have low charges and no stamp duty is payable .

hukx. UK large companies charges 0.07

hmef. emerging markets charges 0.15

hmaf. far east excl japan charges 0.45

hmjp. japan charges 0.19

hmwo. global large companies charges 0.15

vusa USA large companies charges 0.07

vuke UK large companies charges 0.09

vfem emerging markets charges 0.22

vmid uk smaller companies charges 0.10

also many themed ETF's such as clean energy , gold , robotics , mining , health , biotech , security ...

investment trusts have higher charges and stamp duty for most but they are actively managed .

cty uk large companies charges 0.39

phi far east charges 0.99

bguk uk charges 0.51

bgfd japan charges 0.70

bgs japan smaller charges 0.76

bnkr global large charges 0.50

brwm global miners charges 0.93

fcit global large charges 0.54

fgt nick train charges 0.57

grid reneweables charges 0.99

ukw wind charges 1.15

hsl uk smaller charges 0.42

mnks global growth charges 0.48

smt global growth charges 0.35

sson terry smith charges 0.85

wwh global health charges 0.90

:) :idea:

AleisterCrowley
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Re: Is now an ok time to move savings into investments?

#370181

Postby AleisterCrowley » December 27th, 2020, 6:50 pm

Not forgetting VWRL: Vanguard All-World ,which may be all one needs.
https://www.vanguardinvestor.co.uk/inve ... stributing

mattman74
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Re: Is now an ok time to move savings into investments?

#370289

Postby mattman74 » December 28th, 2020, 9:00 am

Hi

The hardest thing about investing is recognising that you can lose money in the short term but this is the price is long term returns.
There is a book “The Psychology of Money” by Morgan Housel - just buy it and read before you do anything.

It helps If you have a long term goal and you know what this is eg retirement

A global tracker (you buy a bit of every stock in the world) eg VWRL (as described in previous post) is a good option as it has very low charges.
I started with a tracker.

A previous post describing the monevator blog is an excellent recommendation.

Good luck

Matt

johnhemming
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Re: Is now an ok time to move savings into investments?

#370290

Postby johnhemming » December 28th, 2020, 9:07 am

mattman74 wrote:There is a book “The Psychology of Money” by Morgan Housel - just buy it and read before you do anything.

This is definitely a book worth reading.

There are lots of issues which relate psychology with money. You can actually see those in the debates in this forum. The underlying difficulty is that investment is taking a risk with economic power and that in itself is a great source of emotional drive. Hence people quite easily get emotionally attached to investments (or emotionally adverse).

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Re: Is now an ok time to move savings into investments?

#370568

Postby Bubblesofearth » December 28th, 2020, 6:28 pm

mattman74 wrote:Hi

The hardest thing about investing is recognising that you can lose money in the short term but this is the price is long term returns.
There is a book “The Psychology of Money” by Morgan Housel - just buy it and read before you do anything.

It helps If you have a long term goal and you know what this is eg retirement

A global tracker (you buy a bit of every stock in the world) eg VWRL (as described in previous post) is a good option as it has very low charges.
I started with a tracker.

A previous post describing the monevator blog is an excellent recommendation.

Good luck

Matt


Good interview with Mr Housel covering some of the issues dealt with in his book;

https://www.youtube.com/watch?v=Wbn_-RhB_tQ

When he discusses traders vs long term investors I couldn't help thinking of Bitcoin which I see is now an eye-watering $27,000.

BoE

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Re: Is now an ok time to move savings into investments?

#370672

Postby LooseCannon101 » December 29th, 2020, 12:18 am

Now is not a bad time to move savings into investments. Probably the best time would have been at the end of March 2020 when panic about the Covid virus was at its peak. There will always be some reason not to invest.

The strongest reason to invest now is that the long-term returns from a low-cost, highly diversified world equity fund are likely to be similar to those of the past 20 years - 8% per annum. Most people do not appreciate the power of compound interest where the typical 8% per annum leads to doubling in value every 9 years.

TomKhakis
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Re: Is now an ok time to move savings into investments?

#370683

Postby TomKhakis » December 29th, 2020, 4:42 am

Cheers, thanks for all the replies. This is all very dense information, a bit like a foreign language and difficult for me to understand. But I can understand some of this.

* The most important thing is that I will follow the advice here, and move forward with investing, either as a lump sum, or over the next year or so. (I'm ok with investments going up and down, since in the long-run they should trend upwards. But I just wanted to make sure I wasn't jumping off a cliff, timing-wise.)

I'm still leaning towards Vanguard LifeStrategy as long as it's not unreasonable. This is simply because Vanguard seems reputable, and their plan is not too difficult to understand. However, it is a bit random because there are tons of other options out there that I am totally clueless about, but to look into all of them would take me forever, and I probably still wouldn't understand each very well. And worst, the analysis-paralysis would probably delay me taking action for months, or indefinitely if work and other issues came up and took all my attention. So I just want to keep it simple to push myself into making a reasonable choice.

One question since ISA was mentioned; does the Vanguard LifeStrategy count as a ISA? I need to look into an ISA as well, and if they count as both, that would simply things. If not, I can tackle the ISA issue next.

Itsallaguess
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Re: Is now an ok time to move savings into investments?

#370686

Postby Itsallaguess » December 29th, 2020, 5:33 am

TomKhakis wrote:
I'm still leaning towards Vanguard LifeStrategy as long as it's not unreasonable.


I bought a chunk of Vanguard LifeStrategy 80/20 a few years ago, and have topped up that holding a number of times since with absolutely no regrets apart from the fact that I really should have done it sooner...

As a lifelong 'hands-on' investor, I wanted to force myself to have a really low cost, well-diversified holding like that actually *sitting* in my portfolio, that had zero alignment with my main 'income-strategy' approach, and through which I could gauge whether my more active 'hands-on' approach was worth all the effort.

Whilst it hasn't quite answered that particular question, what it has been able to tell me is that you generally won't go far wrong with it at all, and so even if you do also want to pursue a more 'hands-on' approach with some of your other planned investments, I really would urge you to consider investing at least part of your capital into something like a low-cost Vanguard LifeStrategy holding, just so you've got that long-term yard-stick staring you in the face at all times...

Cheers,

Itsallaguess

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Re: Is now an ok time to move savings into investments?

#370737

Postby Newroad » December 29th, 2020, 10:34 am

Hi Tom Khakis.

Yes, you can put the Vanguard Lifestyle funds into an ISA: https://www.vanguardinvestor.co.uk/articles/latest-thoughts/how-it-works/ready-made-isa

I'm also with ItsAllAGuess - it's a good idea to anchor your portfolio with something passive and inexpensive, especially if you are less experienced. My approach is along those lines - I split into equities & bonds (the proportions vary for me and the kids) and within those splits, 50% passive in a Vanguard ETF and 50% active in an investment trust.

Over time, it should become pretty clear if passive is outperforming active or vice-versa and then you (and me?) could adjust should we deem it desirable to do so. Note, this could be a reflection of our choice of active vs passive, but then again, what other choice is relevant to us?

Regards, Newroad

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Re: Is now an ok time to move savings into investments?

#370749

Postby AleisterCrowley » December 29th, 2020, 10:54 am

TomKhakis wrote:..

One question since ISA was mentioned; does the Vanguard LifeStrategy count as a ISA? I need to look into an ISA as well, and if they count as both, that would simply things. If not, I can tackle the ISA issue next.


An ISA is simply a 'wrapper' around investments - you can hold Vanguard LifeStrategy in an ISA or outside
If you look at a random example - LifeStrategy 80 - you can see top right it's 'ISA Ready'
https://www.vanguardinvestor.co.uk/inve ... _fund_link

I have a Halifax ISA which contains Vanguard funds, single shares, prefs, bond funds, and cash. It's just a big box which shields the contents from the baleful gaze of HMRC

It's always a good plan to use you ISA allowance in each tax year

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Re: Is now an ok time to move savings into investments?

#370770

Postby Urbandreamer » December 29th, 2020, 11:37 am

TomKhakis wrote:I'm still leaning towards Vanguard LifeStrategy as long as it's not unreasonable. This is simply because Vanguard seems reputable, and their plan is not too difficult to understand. However, it is a bit random because there are tons of other options out there that I am totally clueless about, but to look into all of them would take me forever, and I probably still wouldn't understand each very well. And worst, the analysis-paralysis would probably delay me taking action for months, or indefinitely if work and other issues came up and took all my attention. So I just want to keep it simple to push myself into making a reasonable choice.


I don't think that you can go far wrong with that choice. The suggestion of buying it through a different provider, Halifax, IWeb, II, A J Bell etc is a good one as you allow yourself extra flexibility in the future. At the risk of creating "analysis-paralys" can I suggest that after you have made your investment you get a free ebook copy of "The Investment Trust Handbook" to read.
https://www.amazon.co.uk/Investment-Tru ... 160&sr=8-2

Even if you continue to prefer passive investments, broadening your mind to different options is good. Who knows, in a few years you might like to add a theamed ETF. For the moment don't worry about getting the "right" investment, even a mediocre choice is still quite good.

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Re: Is now an ok time to move savings into investments?

#371404

Postby TomKhakis » December 30th, 2020, 7:19 pm

Unfortunately, I just ran into a major roadblock while trying to open an ISA. From the Vanguard Website: "By clicking the “Proceed” button below, you are confirming that: You are a UK resident. You are not a US tax resident or US citizen." After a bit of searching, it turns out that “The individual is considered to hold the assets within the ISA directly and is taxed on them under normal US rules. The UK tax free treatment of the ISA is not replicated in the US.”

By any chance does anyone have any advice? I realize this is very specialized to expats, so I might have to migrate my question over to an expat forum.

It really a shame that because wealthy people would hide assets in other countries, they've made it very difficult for ordinary people to get by.

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Re: Is now an ok time to move savings into investments?

#371413

Postby dealtn » December 30th, 2020, 7:41 pm

TomKhakis wrote:
It really a shame that because wealthy people would hide assets in other countries, they've made it very difficult for ordinary people to get by.


?

Ordinary people resident to the UK don't have any problem opening ISAs. Ordinary people not resident to the UK will not be able to open one.

Neither of which are anything to do with how wealthy people, or indeed non-wealthy, treat their assets, let alone attempt to hide them.

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Re: Is now an ok time to move savings into investments?

#371425

Postby SalvorHardin » December 30th, 2020, 8:06 pm

TomKhakis wrote:By any chance does anyone have any advice? I realize this is very specialized to expats, so I might have to migrate my question over to an expat forum.

It really a shame that because wealthy people would hide assets in other countries, they've made it very difficult for ordinary people to get by.

Non-Americans buying American domiciled funds can get caught by some really nasty tax traps, such as being taxed on the fund's realised gains (whereas an investment in a British fund does not create a similar liability).

It can be a mess. Even worse is owning shares in an American limited partnership (there are quite a few of these on the NYSE). The distributions and gains from these are generally classed as American earnings from work and therefore require you to submit an American tax return.

Much easier to buy non-American funds. There are plenty of UK / Dublin based funds which invest in America which don't create an American tax liability. E.g. a NASDAQ tracking ETF listed in Dublin will be almost the same as one listed in New York, but without the tax complications.

ISAs are easy to set up. But as dealtn said, you have to be UK resident to have an ISA.

It's got nothing to do with deliberately making it difficult for ordinary people to invest overseas. America has some weird tax laws regarding funds, and many providers are wary of being caught by them.


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