First ever Stocks & shares ISA mr._prude

#1
I am using multiple current accounts 5% but now 3% and kids account for my savings.



But current/kids account rates keep falling and the amount you are allowed to save per account also. Cash ISA rates are pettery poor too (1%)



My pension funds seems to be doing pretty good so that got me thinking about a S&S ISA. I plan to initally put 25% of may savings in it. I may consider setting up a monthly investment too.



I plan on opening a S&S ISA with cavendish as their platform charge is 0.25% and invest in about 8 different funds.



Ishares Physical Gold ETC (12%)

Ishares USD Hg Yld CB UCI ETF USD DI GBP (12%)

Schroder Income Maximiser Acc Z (12%)

Fidelity Sepcial Situations W-Acc (12%)

Rathbone Global Opportunities Inst Acc (12%)

Old Mutual North American Equity U1 Acc (13%)

Cavendish Technology Fund B Inc (13%)

Fidelity Japen Smaller Companines W-Acc (13%)

Typical AMC = 1%



Does the above look a sensible approach?

#2



Does the above look a sensible approach?


Wow. That is a very high risk approach for a new investor. It is way above the typical risk profile of a UK consumer. Especially one new to investing. It also looks a bit fashion investing as well and seems to be lacking any sensible balance.



Are you sure you are ready for the rollercoaster ride that spread will give?

#3



I am using multiple current accounts 5% but now 3% and kids account for my savings.



But current/kids account rates keep falling and the amount you are allowed to save per account also. Cash ISA rates are pettery poor too (1%)



My pension funds seems to be doing pretty good so that got me thinking about a S&S ISA. I plan to initally put 25% of may savings in it. I may consider setting up a monthly investment too.



I plan on opening a S&S ISA with cavendish as their platform charge is 0.25% and invest in about 8 different funds.



Ishares Physical Gold ETC (12%)

Ishares USD Hg Yld CB UCI ETF USD DI GBP (12%)

Schroder Income Maximiser Acc Z (12%)

Fidelity Sepcial Situations W-Acc (12%)

Rathbone Global Opportunities Inst Acc (12%)

Old Mutual North American Equity U1 Acc (13%)

Cavendish Technology Fund B Inc (13%)

Fidelity Japen Smaller Companines W-Acc (13%)

Typical AMC = 1%



Does the above look a sensible approach?
Originally posted by mr._prude


The bottom 5 (highlighted in red) are fine IMO... The fidelity Japanese smaller companies + Special situations are fine.. I would personally look at the Fidelity US W Inc fund for a US Fund and the HSBC American C Inc might be a better choice... For technology, I personally have LGIM one.. Not too sure about the 2 ETFs + Schroders fund...



Have a look at the Vanguard LifeStratergy range.. They're trackers with some good returns + low AMC!

#5



Personally, I don't like holding too many funds all at once! Consider bringing it down to five and be clear on why you are investing in each.
Originally posted by SimonBlake


When you a building a portfolio of single sector funds you need a larger number to get coverage. Typically around 10. However, the OPs coverage is poor and lacks sensible structure. Bespoke portfolios are typically more suited to larger investors. So, the OP is probably looking at £100k plus. Otherwise, multi-asset is almost certainly better.

#6



Wow. That is a very high risk approach for a new investor
Originally posted by dunstonh


Thanks for the reply, if I have to risk my capital I would like a decent return 10%+. I would consider high risk putting 100% savings in the Japan fund. Lol



Yes funds choices were gleamed from Internet



An US equity fund (seeing USA going protectionist)

A global fund (in case above does not work out)

A Japan equity fund (as USA seeks to move from China towards Japan)

A defensive UK equity fund (incase Brexit goes pear shaped)

A technology fund ( the one in my penion is doing very well)

A couple of dividend funds (to give growth plus income)

A US corporate bond fund (US business predicted to borrow more and a hedge against equity funds)

A gold fund (to hedge against equity funds)



Could go for the Warren Buffet's Wife approach



70% small company tracker

30 government gilts



Whether that could be translated from US to UK or Global not sure.

#8



Thanks for the reply, if I have to risk my capital I would like a decent return 10%+. I would consider high risk putting 100% savings in the Japan fund. Lol


Actually, I haven't checked but I suspect your spread would have a higher volatility rating given the very high risk funds you have chosen.






Yes funds choices were gleamed from Internet


You can usually spot fashion investing. it is not a good thing.






Could go for the Warren Buffet's Wife approach



70% small company tracker

30 government gilts



Whether that could be translated from US to UK or Global not sure.


Which was mentioned at a meeting of US investors. The US has different taxation on funds to the UK. Plus,

US investors tend to be very inward looking. Unlike European investors. His wife is also extremely wealthy and aged. His solution would be considered bad investing if you equated it to the UK.

#9



Thanks for the reply, if I have to risk my capital I would like a decent return 10%+. I would consider high risk putting 100% savings in the Japan fund. Lol
Originally posted by mr._prude


You could always take lower risk to your capital for lower, but more reliable, returns. At the moment what you have could easily lose 50%+ over a year or two. Just like putting it all in Japan. Is that fine with you?






Yes funds choices were gleamed from Internet


Well, all funds are named on the internet. Did the internet tell you that these particular ones would work well together and complement each other? It seems a rag-tag collection slapped together haphazardly. Still, like the Dirty Dozen or Magnificent Seven maybe it will be amazing. But really just a coin toss, and it will probably not be amazing at all.






An US equity fund (seeing USA going protectionist)


There's nothing wrong with simply saying you want a US fund because it is the largest equity market in the world. Although to then make it less than a seventh of your portfolio implies you have doubts.




A global fund (in case above does not work out)


It's 57% US so if the US doesn't work out as a good place to be, it is not going to save you.




A Japan equity fund (as USA seeks to move from China towards Japan)


Will the US relations be directed specifically towards smaller companies as in this fund you picked, rather than the large corporate multinational brands? Why? And could you have not found a global fund which includes Japan, as most do?


A defensive UK equity fund (incase Brexit goes pear shaped)


You have not listed any defensive UK funds among your holdings




A technology fund ( the one in my penion is doing very well)


Is it best to buy the funds you have just seen go up rapidly? Or the ones which will go up next?




A couple of dividend funds (to give growth plus income)


No argument that growth plus income is a good thing. Equity funds generally give a bit of both. If you actually want/need a high level of income, don't you want most or all of your funds to give you income as well as growth? If you want growth across the portfolio in most areas in preference to income because you are not going to practically spend it just yet, why are you using the 'income maximiser' fund which deliberately sells a portion of its future growth using derivatives to artificially generate extra income?




A US corporate bond fund (US business predicted to borrow more and a hedge against equity funds)


1) If all US business borrows more and issues more debt instruments the value of the bonds held by the fund will fall due to excess of supply over demand.



2) If US interest rates rise (and the US Fed is pretty much the only part of the world that has signalled that they are likely to raise their interest rates in the next month) then the value of the bonds held by the fund will fall due to better rates being available in the market.



3) You could look at a more international bond fund rather than focussing on one specific country, or - if the bonds are designed to bring stability to the portfolio - at least something in your own currency.



4) The bond fund you selected is high yield corporate bond, which is higher risk than 'investment grade'. It pays higher rates because it is riskier because the types of companies issuing the bonds have lower creditworthiness and the companies might not pay you back as they get into difficulty. In a recession or downturn, when share prices are falling, these high risk less-creditworthy companies are the ones that struggle, being at greater risk of defaulting on their debts, meaning high yield US bond funds are not an effective hedge against US equity funds.




A gold fund (to hedge against equity funds)


Gold can be a poor hedge against equities. It was at historic lows during the credit crunch and rose to all time highs between 2009/10 and 2011 just like equities did.







So, in summary, each item you have picked can be dismissed in one or two sentences as unfit for purpose, sometimes for multiple reasons. And the whole portfolio taken together does not seem any better than the sum of its parts.






Could go for the Warren Buffet's Wife approach



70% small company tracker

30 government gilts


Buffet didn't suggest his wife or heirs or any of the US public buy small companies. He suggested large companies. And he didn't say 30% government debt instruments. He suggested 10%.



So, you are paraphrasing a great investor in what he would recommend for his wife after he passes, when she will be an octogenarian with more money she can possibly spend in the rest of her life, even though it is not how he invests or how would recommend his company's investors to invest... and then mangling both the proportions he was talking about, and the asset classes he was talking about... so it is probably not going to give you a particularly good result when applied to your own personal portfolio.






Whether that could be translated from US to UK or Global not sure.


He recommended investing in a tracker for US large companies as it is simple and cheap and covers over half the world's equity by value, while the companies within an S&P 500 tracker earn most of their income in USD which is the currency his wife's aides will want to spend most of her money in. There is no UK equivalent of that for you.



In the US, a tracker is one of the most tax efficient vehicles possible because it does minimal trading and thus incurs minimal short term capital gains taxes. In the UK we have a different tax regime where gains made by a fund are not taxed until you actually sell out of the fund, so that advantage of index over active does not exist here.



Hopefully people are not following your 'model portfolio' or taking your Mangled Buffett Advice (tm) too seriously.

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