Alternative to financial advisor and index funds

[marymaryquitecontrary42]

A few months ago someone on here asked if they needed an advisor and were told to listen to access some online sources instead. I can't find the post so can someone please recommend the playlists again?

Also interested in index fund recommendations and why you chose them. For example low risk, good industry or spread to invest in, and so on

Thanks!!!

I haven't done it, but the Rebel Finance Course is often recommended.

It certainly makes sense to get educated, even if you do choose to work with an advisor in the future.

I would keep things simple and invest in a FTSE100 tracker - the iShares Core FTSE 100 ETF (ticker ISF) is the most liquid which is one factor making it cheaper to trade. It would also make sense to have some US exposure as this is the largest stock market globally but I would make sure the ETF is hedged to GBP so you are not exposed to currency risk - iShares do a Core S&P500 ETF GBP Hedged ETF (ticker IGUS).

Are you already using your ISA allowance? If not then do put these investments within an ISA wrapper.

I will send you a direct message with a couple more tips.

This is a good site for information https://www.lemonfool.co.uk/

I'd look at a global tracker rather than a UK one. US market is much bigger and recently has given better returns and I don't know why anyone would only want to track the UK. Global gives you exposure to Europe, Australia etc as well.

why would you recommend a FTSE 100 tracker? The UK makes up around 4% of the global market cap.

A better option for most people, including people new to investing would be a global index ETF. VWRP or FWRG would be two options that are popular.

I agree on getting educated, for sure.

I also agree on considering tax wrappers such as ISA or SIPP, depending on your specific circumstances.

Where I disagree is on the bit about using an FTSE100 tracker or hedging to GBP, because

1. for money invested in stocks, there is really no way to avoid currency exposure. Even the FTSE100 companies earn most of their profits in currencies other than GBP. Hedging allows you to delay currency exposure by a year or three, at a cost, but it will not eliminate currency exposure. Instead — with a balanced portfolio of stocks and bonds — it often makes sense, for many investors, to have the bonds in whichever currency will match your expenses, and to accept that the stocks are inherently exposed to currency fluctuations. Of course that may not apply to you - it depends on your circumstances

2. The FTSE100 does not reduce foreign currency exposure, but it does skew your industry exposure: you get lots of banks, fossil fuels, and pharmaceuticals, and you end up with lower exposure to areas like technology and industrial manufacturing. The US market is more than half of the global indices, which is just silly, so it is not as simple as just buying a global index, but going straight to the FTSE100 is also not a simple / « safe » solution.

3. « low cost, well diversified index funds » are a good way to invest in stocks while diversifying, but not all indices are well diversified, and not all index funds are low cost. Look at the expense ratio; anything above 0.25% is probably unacceptable and you may be able to go lower. And look at what is in the index. An index like the NASDAQ is not diversified - it is a basket of US technology stocks. Some indices are very esoteric and narrow - I am sure there is an index of gold stocks, or an index of cryptocurrencies, that is best avoided unless you are intentionally wanting to speculate in those areas.

I've got a S&S ISA already set up but am invested in four individual stocks (FTSE100 companies). Am keen to add a tracker fund into the same ISA and invest monthly.

What I'm not clear on is whether to go for an ETF vs a mutual fund? I see ETFs recommended a lot but thought they were more hassle as you can't just set up a monthly direct debit. You have to invest in the shares manually as you would with an individual company.

Is that right? Thanks for your help.

For monthly investing a regular fund is probably better than an ETF because of transaction fees on most platforms. The corollary is that the fees to hold the fund on the platform might be higher, again depending on the platform.

Agree with others who say global tracker is likely to outperform FTSE tracker over the long run, and will be much more diversified. The Vanguard FTSE all cap index fund (note, in this case FTSE is the index provider - it isn’t limited to the FTSE 100) is about as diversified as it gets, with relatively low fees.

The Monevator website has a good tool for checking which platform would be the cheapest for your preferred mix of funds based on number of share trades, investment size, and so on…

No fees on ETFs in Trading212.

It's a good shout re: transaction fees. I'm on Fidelity and they charge £1.50 per trade (which I'm doing monthly) if you do it via a regular savings plan. If it's done manually, that rises to £7.50 per trade (ouch).

Index Funds for Beginners course from Damien Talks Money/Financial Interest: https://financialinterest.com/index-funds-for-beginners/

Meaningful Money podcast has a huge archive of podcasts and videos about investing and financial planning: https://meaningfulmoney.tv/mmpodcast/