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Where to start with S&S?

Investment discussion for beginners. Why you should invest your money, get help getting started
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Where to start with S&S?

#116215

Postby Cookie » February 6th, 2018, 9:11 pm

I have had a H&L S&S ISA and SIPP and have dabbled with some funds with my gains cancelling out my losses and breaking even

I would like something that is quite passive and doesn't take much maintenance for a reasonable gain (capital preferred, but income would be ok)

Where do I start?

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Re: Where to start with S&S?

#116234

Postby tjh290633 » February 6th, 2018, 11:23 pm

Have a look at the global Investment Trusts. FRCL, Witan, ATST, etc

TJH

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Re: Where to start with S&S?

#116246

Postby TUK020 » February 7th, 2018, 6:34 am

Also take a look at the Monevator website for sections on passive investment, and investment trusts

http://monevator.com/category/investing ... investing/

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Re: Where to start with S&S?

#116258

Postby Urbandreamer » February 7th, 2018, 8:11 am

I'm not really into passives myself, but US, UK or global ETF's are said to have low charges.

https://www.justetf.com/uk/how-to/msci-world-etfs.html

Obviously they have a high degree of diversification, ie a UK etf will have noticed the recent liquidation of Capita, but not been hugely affected by it, global ETF's almost not at all. They ALL will have notced the recent sell off.

Ps the likes of FRCL, Witan etc, while very good should not be described as passive. They require no effort on your part but you are paying someone else to put the effort in (and in my opinion it is worth doing so). I own some FRCL myself.

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Re: Where to start with S&S?

#116282

Postby GeoffF100 » February 7th, 2018, 10:05 am

It is not possible to beat the market in risk adjusted terms, except by chance:

https://www.youtube.com/watch?v=SwkjqGd8NC4

Costs and diversification are what matters. Vanguard Life Strategy is reasonably cheap, and involves almost no work. Here is a slightly more complicated approach:

http://monevator.com/this-former-hedge- ... ck-videos/

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Re: Where to start with S&S?

#116287

Postby kempiejon » February 7th, 2018, 10:16 am

GeoffF100 wrote:It is not possible to beat the market in risk adjusted terms, except by chance:
/


Quite so, buy the market, I started off with a UK FTSE100 trackers and adding annually. These days I might consider global ETFs a "better" starting point, as Urbandreamer said there's a choice of international, regional, global etfs, vanguard also mentioned offer the global VWRL.
Last edited by kempiejon on February 7th, 2018, 10:19 am, edited 1 time in total.

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Re: Where to start with S&S?

#116379

Postby Chrysalis » February 7th, 2018, 3:40 pm

I agree with those pointing you in the direction of low cost index funds.
Two things leapt out from your post: 'dabbling in funds....gains and losses cancelled out'....I strongly suggest you read about the ways that our emotions and behaviours can sabotage our best efforts at investing. Come up with a plan you are comfortable with, preferably write it down, and then try to resist the temptation to fiddle!
Second, and slightly related, you say you want gains and hopefully income. Don't we all! While we all anticipate that over the long term, equity investments will give a real return, this is absolutely not guaranteed. Take a while to think about your own level of risk tolerance and also your time frame of your investments - what are you investing for?

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Re: Where to start with S&S?

#116624

Postby Quint » February 8th, 2018, 2:15 pm

GeoffF100 wrote:It is not possible to beat the market in risk adjusted terms, except by chance:

https://www.youtube.com/watch?v=SwkjqGd8NC4

Costs and diversification are what matters. Vanguard Life Strategy is reasonably cheap, and involves almost no work. Here is a slightly more complicated approach:

http://monevator.com/this-former-hedge- ... ck-videos/


When making these comparisons why do they always assume the fund manager charges 2%

Lindsell Train Global Equity charges 0.54% sure more than a tracker legal and general international index is 0.08% (both with HL so include the HL discount) so the difference is 0.46% less than a quater of the 2% they like to quote.

Or am i missing something?

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Re: Where to start with S&S?

#116637

Postby Urbandreamer » February 8th, 2018, 3:20 pm

Quint wrote:
GeoffF100 wrote:It is not possible to beat the market in risk adjusted terms, except by chance:

https://www.youtube.com/watch?v=SwkjqGd8NC4

Costs and diversification are what matters. Vanguard Life Strategy is reasonably cheap, and involves almost no work. Here is a slightly more complicated approach:

http://monevator.com/this-former-hedge- ... ck-videos/


When making these comparisons why do they always assume the fund manager charges 2%

Lindsell Train Global Equity charges 0.54% sure more than a tracker legal and general international index is 0.08% (both with HL so include the HL discount) so the difference is 0.46% less than a quater of the 2% they like to quote.

Or am i missing something?


Well personally I thought the statement "It is not possible to beat the market in risk adjusted terms, except by chance:" a bit more provocative.

Mr Buffet recently won his bet that index trackers would beat hedge fund managers IN THE US, but I think given his long years of successful investment work he might find it a bit irritating for someone to claim that he has been lucky throughout his investment life. He maintains that it's HARD work and very difficult, hence his argument that most people should just buy the market.

Still, Geoff and others can invest where they choose and so can I. The OP wished advice on passive investments and I respect that decision.

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Re: Where to start with S&S?

#116679

Postby GeoffF100 » February 8th, 2018, 4:59 pm

Lindsell Train Global Equity charges 0.54% sure more than a tracker legal and general international index is 0.08% (both with HL so include the HL discount) so the difference is 0.46% less than a quater of the 2% they like to quote.

Or am i missing something?

Yes. The transaction costs are very low for market weighted trackers. However, if you include market impact, the transaction costs for managed funds are typically over 1%. If the OCF is about 0.5%, the total costs for a manged fund are likely to be about 2%, plus any platform fee you pay.

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Re: Where to start with S&S?

#116728

Postby GeoffF100 » February 8th, 2018, 8:06 pm

r Buffet recently won his bet that index trackers would beat hedge fund managers IN THE US, but I think given his long years of successful investment work he might find it a bit irritating for someone to claim that he has been lucky throughout his investment life. He maintains that it's HARD work and very difficult, hence his argument that most people should just buy the market.

I would rather believe the Nobel prize winning economists in the videos. Buffet clearly has an axe to grind. More to the point, I believe the evidence that the economists cite.

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Re: Where to start with S&S?

#116751

Postby Urbandreamer » February 8th, 2018, 8:59 pm

GeoffF100 wrote:Buffet clearly has an axe to grind. More to the point, I believe the evidence that the economists cite.


But which economists?

I'm currently listening to "MissBehaving" by Thalar who has some VERY interesting things to say about the EMT. In particular he points out that for decades RDS had seperate but linked share classes based in Holand and the US (RDSA and RDSB I think). The earnings were attributed 1 to 1.5 hence one should be valued at 1.5 times the other. Yet for decades there were significant price discrepencies between the two. Ie it was possible to sell one short and use the money to buy the other and in doing so make money!

The fact is that the market is what people buy and sell. People are not robots, hence they can overvalue or undervalue something. I believe that it is possible in some cases to identify that fact. Proponents of the Efficient Market Theory despute or deny that. My own experience is seeing the damage done by storms in the UK one year and recognising that investing in a company that put things right should make me money. Strangly the share price didn't go up until the profits from the work that they later did were anounced.

With respect to Buffet, his mentor made a lot. He has made a lot. Can we copy them, well I admit that I can not. I have to do it my way, right or wrong. You can't, or won't. Does it mean that he can't or that the original "Inteligent Investor" couldn't? History seems to say otherwise, and I would argue, disprove your statement vis-a-vi "It is not possible to beat the market in risk adjusted terms, except by chance:".

Of course I'm ignoring costs in paying a manager in the above. There IS a strong argument that the costs of paying for an active fund can ensure that it underperforms. Again there are exceptions that clearly show that it's not a natural law.

Ps, I'll try and watch the vid, but seriously it didn't start well and is over a hour.

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Re: Where to start with S&S?

#116768

Postby Urbandreamer » February 8th, 2018, 10:14 pm

Ok Goeff I've started listening and got a bit further.

I have got as far as the statement that
" Only 1% after fees outperformed.."
"But even those didn'r when you accounted for fees."

HANG ON!
Less than 3 min in they are are making statements that they CLAIM to be untrue!
2.15 min IN !!!!!

Look why should I bother further? It's a polemic that is inconsistant within 3 min! Based upon the facts that these people are well paid, which has to be wrong!

Why oh why should I listen further?
Can I believe a word they or the voice over and talking head says?

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Re: Where to start with S&S?

#116785

Postby Alaric » February 8th, 2018, 11:27 pm

Urbandreamer wrote: Proponents of the Efficient Market Theory despute or deny that.


The existence of accountants and accounting standards renders efficient markets a difficult concept to accept.

Quite simply if you let two sets of managers, accountants and auditors loose on identical sets of data about a company, they would be very likely to come up with two different sets of accounts. Thus their impact on prices investors would be prepared to pay would be different. Those who avoided losses on Carillion and Capita are those who obtained "inside" information by being sceptical about the value of the assets on the balance sheet.

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Re: Where to start with S&S?

#116787

Postby Urbandreamer » February 9th, 2018, 12:04 am

Alaric wrote:Quite simply if you let two sets of managers, accountants and auditors loose on identical sets of data about a company, they would be very likely to come up with two different sets of accounts.


Well of course I agree.

However, for those other than the OP (who has made a decision) who may be folowing this thread, can I recomend struggling through the vid recomended by Geoff!

IMHO it's a hoot. OK there are many important points in it, but it is so ploemic that it is untrue!

I am now up to 45 min in and they are talking about Mr Buffett. I question if Geoff got that far. Mr Buffett is certain that EMH is WRONG, WRONG WRONG. But it's diicult to beat the market.

Ps so far only one ecconomist, though why we should accept his opinion over another ecconomist I don't know. Did he,like Keyns invest? Or is he just another talking head?

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Re: Where to start with S&S?

#116788

Postby Urbandreamer » February 9th, 2018, 12:21 am

Whooo

1 hr in. And they have mentioned Benjimin Greaham (Mr W.B's tutor and writer of the inteligent investor) and are now talking "Whatever route you go down pasive-active or ..", did Geoff watch the Vid?

Still just the one ecconomist, though...

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Re: Where to start with S&S?

#116791

Postby Urbandreamer » February 9th, 2018, 1:00 am

So... I've watched to the end, of Geoff's vid.

The Vid DOES NOT claim that passive investment tracking is "right" or even the best for any given individual.
Eugene Fama is the ONLY Ecconomist in the video, who also argued that markets are efficient and provided sufficient evidence to win a Nobel prize.

That said, as investors, I seriously feel that there are significant doubts about EMH, and that even if that were not the case, many would chose to invest in areas that EMH refuses to consider.

For example, it is well known that there are ethical funds. The investment view is not pure returns, yet many choose to invest.

I confess that even I take pride in my holdings that provide motorway barriers, seek new drugs, build sub's and provide electricity to people.
I'm not sure if I could feel the same claiming that I invest in the S&P or the FTSE100.

Just a personal opinion and in NO way a comment upon the OP's intentions.

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Re: Where to start with S&S?

#116804

Postby GeoffF100 » February 9th, 2018, 8:06 am

Nobody claims that the strong form of the EMH is accurate. Nonetheless, it is a fact that only a small proportion of active managers outperform the index after costs. There is also abundant and strong evidence that it is not possible to predict in advance which active managers will succeed. In particular, those who did well in the past are no more likely to do well in the future than those who did badly. (Actually, there is a small momentum effect, but it is not tradable.) If you buy a passive fund, you are guaranteed to finish near the top. If you buy an active fund, you have only a small chance of doing so. Nonetheless, there will never be a shortage of people who think they can beat the odds.

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Re: Where to start with S&S?

#116806

Postby tjh290633 » February 9th, 2018, 8:19 am

What about those who do beat the odds? Taken over the long term there are plenty who have beaten their chosen benchmark. Some benchmarks do better than others.

So, if I choose to invest for dividend income and beat the FT350HY index, both in terms of capital performance and in terms of income received, and do that over 20 or 30 years, why might I have been better off following a passive route?

Many of the tracker funds and ETFs have only appeared on the scene in recent years. After all the FTSE100 is a relative Johnny come lately. All they can do is to track the market and usually underperform, because of the costs involved.

TJH

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Re: Where to start with S&S?

#116812

Postby Alaric » February 9th, 2018, 8:52 am

tjh290633 wrote:What about those who do beat the odds? Taken over the long term there are plenty who have beaten their chosen benchmark. Some benchmarks do better than others.


The other side of the theory is that you can get better returns by increasing risk. Why does that represent a problem? You get worse returns by reducing risks. Hence all the pension deficits when funds sit defensively in index gilts.

You can increase risk even in the universe of passive funds. So mechanically investing in stocks with high dividend yields puts you in junk stocks like Carillion. You can protect yourself by doing a bit of digging into the quality of the stated assets and earnings, but that's active management and allegedly not possible by efficient market theorists. Necessary though to avoid asset collapses.


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