Beginner investment strategy

đź“Š Investing
1

Hi All

New to all this, I am thinking about my investment strategy, and what I have come up with is below.

I would appreciate thoughts - before I begin and make a mistake!

My mantra essentially is “invest in companies that have showed continued success” - and I appreciate that “past performance does not guarantee future performance”.

Supporting my mantra is that these are companies have operated for decades, and built up a dominance in their industries, and i foresee that they will continue to be market leaders in their industry.

So, I plan to create a pie to invest in, companies such as BAE Systems, Walmart, Visa, Mastercard, Caterpillar… which apart from blips, have consistently risen…

Apart from the obvious “past performance does not guarantee future performance”, is this strategy flawed?

Thanks!

2

Valuation matters. They might be great companies and continue to be so, but if their returns fall short of the marker thus forward why bother?

1 Like
3

Thanks for that view. So, current P/E ratio always the best marker rather than past performance?

4

Invest 95% plus into the S&P500 or an all world index fund, and use your spare change for your own stock picks to begin with would be my own advice.

3 Likes
5

Thanks - Good advice.

6

Not necessarily PE but some kind of valuation framework to suit the company you’re investing in.

1 Like
7

A follow up here, if i invest in S&P500, VUAG as an example, is there a charge? Thanks

8

The fund manager takes a fee regularly from the fund itself, not from your account, so you won’t ever see anything going out.

1 Like
9

Thanks - and where can i see the fund charges that would be taken from my account?

10

Justetf.com is a good website to screen ETFs, review fees and past performance.

2 Likes
11

You won’t see them, as per my post. They’re taken from the other side.

If you want to see charge % just type in the funds ticker and KIID on Google and you’ll get a little fact sheet. On 212 scroll down to the bottom of the listing and go to instrument details. Will be in there.

1 Like
12

Thanks both! Appreciated

13

Posting some follow up qs related to my strategy.

As recommended, investing 95% in S&P500 (or world index fund) is a sensible thing for me as a beginner.

There are so many funds out there I am struggling to determine which is best… doe sit matter WHICH S&P500 fund? does it make much of a difference?

Q1. VUAG and VUAA are both “Vanguard S&P 500 (Acc)”, and both on LSE- so what is different between them? i do appreciate VUAA is dollars, and VUAG pounds.

Q2. Is it sensible to just pay into the 1 fund? i.e. would it be detrimental to spear across more than 1 S&P fund, as i assume they are all pretty similar?
e.g. iShares Core S&P 500 is another one ive looked at.

Q3. Is it sensible say to have 90% in S&P, 5% in an india or world fund (and 5% as spare change for own funds). Or even, 5% in EACH of india and world?

Thanks!

14

Q1. VUAG and VUAA are both “Vanguard S&P 500 (Acc)”, and both on LSE- so what is different between them? i do appreciate VUAA is dollars, and VUAG pounds.

As you said, the difference is that VUAA is in USD and VUAG is in GBP. If you are a UK user and your account currency GBP, you won’t pay any FX fees for buying VUAG.
image
image

Q2. Is it sensible to just pay into the 1 fund? i.e. would it be detrimental to spear across more than 1 S&P fund, as i assume they are all pretty similar?
e.g. iShares Core S&P 500 is another one ive looked at.

Investing in multiple S&P500 ETFs is pointless. Just pick one that you like or has the lowest fees and invest in that. If you look at the Instrument Details for each one, you can open the “Key Information Document” and see the fund management fees.

Also bear in mind that the All World ETFs are usually heavily weighted towards US companies, so investing in S&P500 and All World ETFs at the same time will result in a lot of overlap. It would be more efficient to just pick one.

Q3. Is it sensible say to have 90% in S&P, 5% in an india or world fund (and 5% as spare change for own funds). Or even, 5% in EACH of india and world?

If you have reason to believe that the Indian economy is going to grow then allocating some of your funds to an India ETF might be a good idea.

Disclaimer: I am not a financial advisor

2 Likes
15

Thanks - really appreciated.

1 Like
16

Thank you everyone for all of the advice - i really appreciate it

One final question (but don’t hold me to it!).

I can’t decide which one of these to go for… i think they are pretty similar… I have considered having BOTH, but assume that’s a bit pointless?

iShares Core S&P 500 (Acc) - CSP1
Vanguard S&P 500 (Acc) - VUAG

Advice appreciated.

Thanks!

17

This one has 0.07% fees.

This one also has 0.07% fees.

So I would go with the bigger one CSP1, it’s most likely to maintain lower fees and have a tighter spread.

1 Like
18

Thanks for that view - appreciated.

19

I’m going to throw a spanner in the works, why are you excluding this?

Which is why DYOR / justETF and other site comparisons are worthwhile.

1 Like
20

Thank you.

Just an oversight, have done lots of research, but an oversight on this one. I will take a look.