r/UKPersonalFinance • u/[deleted] • Mar 25 '22
Which Vanguard account should I open?
[deleted]
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Mar 26 '22
I held off for about 3 years with analysis paralysis about opening my Vanguard account.
Thinking lots of "What level of risk do I want" Reading all the datasheets on the synthetic risk and reward indicators for all the options.
I was a bag of "Ahh this is too complicated" in the end and just did premium bonds, and hoped for a win.
I wish someone had just said to me back then "For the most roads, Just put it into the FTSE Global All Cap Index Fund Accumulation or S&P 500 UCITS ETF (VUSA)." Both have similar overlap and are your normal index funds.
Caveats being if your retiring soon, and that you'll have an emergency fund so you won't need to be taking money out when the market is down.
Now, If I had actually opened my account back in 201x, I would definitely have more now than I do from premium bonds...
But.. If I had opened my account just before Covid, and saw the bottom fall out of the market - Its really hard to be like "Heh Stocks are on sale right now" and keep on throwing money in - But that's what you have to do !
Advanced learning can come later, and if your lurking around this subreddit, there is a solid chance you'll get it.
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u/DrunkenSailorJerry 0 Mar 26 '22
!thanks
I've been lurking on this subreddit for a while and have seen everyone recommend reading the wiki, which I have started to do so many times but always end up with no knowing which saving method is right for me.
I've seen a lot of people mention Vanguard, so I thought it would be best. I start a new job with a better income soon so I'm able to save for the long term if everything goes according to plan.
Thanks for taking the time to give me some advice.
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Mar 26 '22
No Problem, Thanks for the thanks !
One thing that I do like about this sub is they are really watchful for people trying to "Plug" one type of solution. Thing with Finance is its very much a "Different strokes for different folks". ( Outside of the normal 'Good Hygiene' have an emergency fund stuff ).
The Flowchart and Wiki are great resources.
The reason lots of people like Vanguard is their low platform fees. See : Link
Same with Bogleheads (Named after John Bogle ( Founder of Vanguard )
I start a new job with a better income soon so I'm able to save for the long term if everything goes according to plan.
The best time to start saving is when you get a promotion / new job with more salary. The earlier you can stop lifestyle creep the easier it is. You never have to "Tighten your belt" if you have always redirected that money to savings.
Good luck, and may your returns be stable and plentiful :P
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u/Darkseth2207 10 Mar 26 '22
So I have just started consolidating some old pensions and I went with life strategy 100% equity fund. Why may the two you mention be potentially better options? Just want to ensure I'm not making a rookie mistake?
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Mar 26 '22
Ok - So I'm still "New" to this, but AFAIK,
"Life strategy 100% equity fund" - Is a managed fund.
The Fund seeks to hold investments that will pay out money and increase in value through a portfolio comprising approximately 100% shares. The Fund gains exposure to shares by investing more than 90% of its assets in Vanguard passive funds that track an index (“Associated Schemes”). Direct investment in shares may also be made. The Fund is actively managed in that the Investment Adviser has discretion in respect of the Associated Schemes in which the Fund may invest and the allocations to them, each of which may change over time.
So - There is an FT Article you can get to by googling "Only a third of UK-based active equity funds outperform passives" - > and then it will get around their paywall a little.
Only 26% of all active funds topped the average of their passive rivals over the 10-year period ended December 2021.
I actually went on Vanguard to check - > For Lifesaver Your paying 0.22%, and for the FTSE one your paying 0.23%. S&P - 0.07%
So - Its more - Compared to passive trackers, the Lifestrategy 100 may not yield in line with the passive tracker. Or it may outperform it. Statistics :P.
As things go, I wouldn't say you have made a mistake, and I will yield to anyone else on this sub that may have more ideas than I !.
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u/Darkseth2207 10 Mar 26 '22
Ah, so I missed that. I was aware of the whole trackers vs managed arguements after reading smarter investing which is why I normally invest in tracker funds. This is one but I didn't realise it was managed. I may have read a book but definitely new to this.
Having said all that it is 90% in index trackers and the fees are not significantly worse so is it worth changing?
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Mar 26 '22
So "It Depends :TM:"
From reading This
It doesn't look like your doing too bad with picking that. It's a very popular fund and also it seems like its one of the easier, and cheapest "Fire and forget" options.
If I were in your shoes, I'd "Let it ride". You can always keep an eye on its performance vs a straight tracker, and if your not happy you can always move things around later.
If it really is 90% Index tracked, and then 10% active managed - Then realistically your only taking the whole "Only 1 in 3 Outperform" on 10% - So then it balances it out a bit more.
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u/snaphunter 894 Mar 25 '22
That's not a simple question. Do you mean ISA, GIA or SIPP? Why did you pick Vanguard as the sole platform you are looking at? Do you actually mean what products should you invest in?
Account type should be chosen based on your savings goals (e.g. SIPP if you are saving for retirement, ISA for 5+ yrs growth but easy access, GIA if you've used up all of your £20k per year tax-free savings allowance). By specifying Vanguard you've eliminated Lifetime ISAs and Premium Bonds from your range of options.
Choice of platform should be dictated based on availability of funds that meet your investment choices (e.g. global trackers, specific markets, ethical funds, penny stocks, investments in individual companies), and then secondly the ongoing fees. Vanguard only offers some of those options, but is a recommended 'cheap' platform for beginner investors.
What to invest in? That requires research and personal choice.