Remove ads

Investment advice to adult children

Closed-end funds and OEICs
Leither
2 Lemon pips
Posts: 219
Joined: November 4th, 2016, 8:30 pm
Has thanked: 131 times
Been thanked: 17 times

Re: Investment advice to adult children

#88565

Postby Leither » October 16th, 2017, 1:00 pm

BarrenWuffett wrote:I think mainly their own index funds and the odd ETF. Here's an article on Monevator which may be of interest.
http://monevator.com/using-vanguard-lif ... unds-life/


Thanks BW, I see now that it is indeed a mix -

https://www.vanguardinvestor.co.uk/inve ... folio-data

In the Motevator link that you or someone posted, there is a query about the yield; it was then something like 1.5% on the LS fund but 2.45% on the underlying funds. This was sort of brushed aside but it's something I would look into in more detail.

Cheers,

Leither.

Leither
2 Lemon pips
Posts: 219
Joined: November 4th, 2016, 8:30 pm
Has thanked: 131 times
Been thanked: 17 times

Re: Investment advice to adult children

#88567

Postby Leither » October 16th, 2017, 1:03 pm

Dod101 wrote: I would also be very nervous about running a portfolio for someone else. It is one thing doing my own thing and I am happy to stand or fall by own decisions with my own money but for someone else?

Dod


No intention of doing so Dod! At a time when I'm looking to simplify my own investments I certainly don't wish to take on anyone else.

Regards,

Leither.

Leither
2 Lemon pips
Posts: 219
Joined: November 4th, 2016, 8:30 pm
Has thanked: 131 times
Been thanked: 17 times

Re: Investment advice to adult children

#88569

Postby Leither » October 16th, 2017, 1:11 pm

GJHarney wrote:
One easy way to do the IT approach though in my opinion would be though Baille Gifford as their savings plan (or ISA) has no charges (only the standard charges for each IT you hold in it), no charges for the regular investments (other than the standard stamp duty levy) and automatic and free divi reinvestment (you also get their rather good regular magazine with regular offers of free tickets to literary festivals, if they are into books that could swing it!), and with a single monthly DD you can split it a number of very interesting ways into their different IT's (minimum £30 per fund), so a 4 or 5 way split and you have a great ready made basket that could include Scottish Mortgage, Monks, SAINTS, one of their two Japanese funds, and perhaps Edinburgh Worldwide (for small cap growth) and/or Pacific Horizon. As a one-stop fire and (almost) forget shop with no platform charges I think you (and they) would struggle to find better.


Interesting GJ. I saw you'd posted similarly elsewhere. I can remember Baillie Gifford from the days they had their office in Charlotte Square and I was in an accountancy practice opposite. And of course their Scottish Mortgage IT has done well for me.

Regards,

Leither.

Dod101
Lemon Slice
Posts: 662
Joined: October 10th, 2017, 11:33 am
Has thanked: 110 times
Been thanked: 241 times

Re: Investment advice to adult children

#88575

Postby Dod101 » October 16th, 2017, 1:47 pm

I have no wish to be controversial and I like Baillie Gifford and also hold Scottish Mortgage. As an investment house they are better than most I think if for no other reason that they are one of the very few independent partnerships left. However I would not look to them as my only IT managers. They have good and not so good products and in any case would not put all my eggs in their basket.

Choose the product, and not the manager.

Dod

GJHarney
Lemon Slice
Posts: 434
Joined: November 26th, 2016, 11:06 am
Been thanked: 84 times

Re: Investment advice to adult children

#88663

Postby GJHarney » October 16th, 2017, 6:25 pm

I think though Dod that if you are looking to recommend some products for people that may not be very interested in the investment anorak stuff that we are then you need to keep it simple, and a one stop shop approach is a good starting point for that. Both Vanguard and a selection of IT's from BG would do that (and I think that a SM, Monks, SAINTs and Jap fund BG combo is overall pretty hard to better elsewhere), but they also do it cheaply. As soon as you start multiplying the investment locations in the portfolio you add both complexity and risk higher charges and so while I used to recommend F&C and their IT's in the same way, but now their platform charges that were introduced a few years ago are not good in my view (and particularly not good for those that might not know any better) so I no longer do.

There are other alternatives for new investors of course. Fundsmith gets a lot of mentions normally, although while I like his investment style very much, the charges are way too high and I really fear for the value of the enterprise given it is so identified with one person, and what happens when Terry eventually goes to the great investment market in the sky? At least with the non-'big names' investment team approach of the BG funds that is never going to be a problem, likewise for the Vanguard ETF approach, and that is important for something that is probably going to be a 'fire and forget' investment.

LooseCannon101
Lemon Pip
Posts: 72
Joined: November 5th, 2016, 2:12 pm
Has thanked: 82 times
Been thanked: 25 times

Re: Investment advice to adult children

#88710

Postby LooseCannon101 » October 16th, 2017, 9:42 pm

I would choose a world equity index tracker or equivalent e.g. one or more global equity investment trusts that are benchmarked against the MSCI World Equity Index.

Financial education is the key - market history, compound interest, re-investment of dividends, pound-cost averaging,...etc. A simple approach that doesn't require any tinkering should delivery more than satisfactory returns.

1nv35t
Lemon Quarter
Posts: 1680
Joined: November 4th, 2016, 8:18 pm
Has thanked: 43 times
Been thanked: 220 times

Re: Investment advice to adult children

#91955

Postby 1nv35t » October 30th, 2017, 11:57 pm

Since the 1970's investors have seen a massively rising tide effect of transition from exceptionally high interest rates down to exceptionally low interest rates as of present. That has served the golden generation well. Barring another rapid collapse and rise of interest rates, massive decline in prices, that history is unlikely to repeat.

Longer term (century+) stocks have managed to provide a 9% gross total return (assuming dividends reinvested) relative to 3.8% annualised inflation over the same period is suggestive of a 5.2% real benefit.

BUT! CPI inflation has been aided by technology/robotics. Fields full of farm workers replaced by machines operated by a couple of workers ... etc. i.e. production costs have relatively declined which has enabled consumer prices to relatively lag. Compare for instance that 3.8% to the average of house price, CPI and share price increases that annualised at 5%!

Taxation in the past was less forgiving as well. Around half of 9% stock gross total return arose out of reinvesting dividends. Historically a basic rate taxpayer paid 37% tax on dividends (1.7%).

Costs historically were much higher. Often >1%, and market makers had a field day with postal trading orders where they could widen the spreads out to 10% or more. £100/trade type broker fees were also much more common.

The financial sector is the worlds largest/richest sector. Within that private investors often have a tendency to lag the market due to buying high (greed), selling low (fear). Broadly its estimated that adds a 1.5% annualised drag upon portfolios.

Tally the reality and many investors might have been better served by simply investing in cash deposit accounts. Many pre-1970's mature investors were more content to hold safe savings accounts or bonds than 'speculate' in stocks.

My advice to the adult-kids would be not to be taken in by the financial sectors sales pitch. Often the suggested higher rewards from stocks compared to alternative assets are mathematically evident, but in practice only serve others not the investors benefit. It's more important to minimise costs, minimise taxation and invest in a buying groceries like manner (buy more when prices are low, buy less when prices are high). And diversify widely (which doesn't mean just a bunch of different stocks, but rather different assets with differing geopolitical risks). For instance high yield stocks are a invitation to be subject to ongoing/regular (dividend) taxation, such regular taxation risk can be reduced by minimising dividends. If net real gains are barely 0% then blending with other 0% assets that move distinctly differently to one another along with rebalancing will yield a >0% benefit (volatility capture is part of total gains along with income and price appreciation).

Don't get suckered in and believe that the next generation will get anywhere near the pension benefits, care benefits and/or investment reward benefits enjoyed by the previous generation.

Kantwebefriends
Lemon Pip
Posts: 90
Joined: November 5th, 2016, 4:02 pm
Has thanked: 4 times

Re: Investment advice to adult children

#95488

Postby Kantwebefriends » November 14th, 2017, 12:00 am

I don't give the children investment advice. If I did it would be to alter their portfolio allocations from their current split between international equities and "bonds" to a three way split: a little gold would be added.

I take a gloomy view of gilts and so on; I think their choice of premium bonds is rather a crafty place to hold the conservative part of a portfolio though I think there's also a decent case for TIPS. The other thing I might recommend for the conservative part of a portfolio is paying down a mortgage, depending on the terms of the loan.


Return to “Investment and Unit Trusts”

Who is online

Users browsing this forum: No registered users and 3 guests