I am a newby. I have been reading about stock investments for a month and so. But I still don’t feel much confident of what I have concluded. So I guess I am looking for some kind of advice or validation.
First of all, my investment goal is long term. So generally I am interested in ETF investment, but I am also curious about investing in shares. Initially I am thinking of investing ÂŁ500/month.
I am thinking of investing ÂŁ300/month on ETFs based pie. For this I am thinking of 30% UK ETF (Vanguard FTSE 250 GBP), 30% US (Vanguard S&P 500 ETF), 15% EU (Vanguard FTSE Developed Europe GBP), 15% Japan (Vanguard FTSE), 10% emerging market (Vanguard FTSE Emerging Markets GBP). My doubt here is that, is this reasonable distribution of percentage among these markets ? And do you thinkg these ETFs are good choice, or do you suggest any others ?
ÂŁ100/month on FAANG+ shares. ÂŁ10 each.
ÂŁ100/month on smaller companies from various sectors that I would do research and read news and allocate shares on ad-hoc base.
The overall plan seems sound, I’d probably just stick to the FTSE all world rather than having so many different ETFs as the more you have the more their (the ETF not T212) fees eat into your earnings. Maybe FTSE all world(already contains EM, Japan, US, UK, EU among others), Nasdaq 100 for some extra tech exposure and a small % to FTSE 250 for home bias plus it performs better than FTSE 100 (I’m assuming you’ve realised that as you mentioned FTSE 250 anyway).
ÂŁ100/m in FAANG would be ÂŁ20 each though? Unless you mean to include some extras that you see as being on par with them.
ÂŁ100/m play money sounds reasonable with the rest of your allocations.
These are all just my opinions and you can choose to ignore them completely as I’m just some rando on the internet.
First of all I like your overall strategy those percentages are usually dependent on your risk/pain threshold but I am going to assume you are young(ish) and not near retirement.
Before we start I am not qualified by any means and this is not financial advice, just my opinions.
First thing is this 3 groups does not necessarily needs to be equal weight. Diversifying for the sake of diversification kills gains. The ETF group will anchor your gains losses to a more stable point faang, will be a bit more risky/rewardy and small cap will be a bit more than faang. so feel free to adjust these overall percentages to your pain threshold. don’t be scared with something like 60/20/20 or 20/40/40 and notice despite having exact same shares these two distributions are completely different risk profiles.
I got two comments about your individual selections, for ETFs I don’t like developed EU and Japan these two are dead weight and will probably gain like 5%? in the next 10 years. If you have reasons to pick these keep them. But If you are picking these just for the sake of geographically diversifying your portfolio, i’d loose them. This is a personal opinion but the more “generic” the ETF the worse it is. I’d rather buy gold instead of a deadweight like all world etfs. And I’d rather pick sector/industry spider ETFs rather than generic ones. i.e when you are buying EU developed ETF, take a look at whats inside, most of those giant companies inside are either dead or will die in 10years. there are spiders for EU tech - healthcare - real estate etc. Do some research and mix in the ones you like/understand.
I have bought several of FAANG stocks in the past, but for the last 6 months or so (after covid recovery) I believe these shares are a bit too expensive (at least for me) so I’d hold on to spending too much money on these.
Interesting opinion, I don’t completely agree. In terms of total return you are mostly right though as it will just give the average return of the market (and due to weighting is basically almost just S&P500), but has the opportunity to grow if an unexpected market starts to outperform, with mostly lower volatility.
That said ETFs are mostly a way to manage risk so I’m doing pretty well without relying on ETFs for managing my own risk.
The only other reason I’d pick up an ETF than risk management would be if it gives me:
access to companies I don’t otherwise have access to (e.g. I have an investment in ESPO to get some of the Chinese gaming and tech big boys) or;
an investment into without really caring what I’m investing into exactly (clean energy ETF, it’s the future but I don’t really want to research about it so I picked up the ETF).
Thanks. Thought I am feeling very itchy. But I think I will follow your suggestion and use the Practice platform with my proposed portoflio for a month at least, or whenever the lockdown is announced.
For the FAANG stocks, if I start putting in ÂŁ100 per month, it will average out the stock price. No need to wait for the right moment in this case. Right ?
I have been in the stock market for over two decades and if I learnt anything that is “I am terrible at timing the market” so what you said is essentially correct.
I have a long list of things to buy and I buy “some” of them when ever I have money. But some of them get very expensive (i.e amazon at the moment) from time to time, and I stop buying those for a while, until others catch up or may be the expensive share goes into correction. In the meantime I can buy something else from my “bucket list”
Not a bad should/split, but you could consider an ETF that does what you suggest already - something like VWRL.
Why are you interested in holding FANG stocks - does that not over expose yourself to US stocks? Then again if it’s £100 a month, but to throw a spanner into the works, look at XDWT as an alternative.
To be fair, FAANG+M (MAFANG?) Are all globally exposed companies, so it’s not a huge point of worry these days.
Maybe if the EU really does push through their new rule stopping the US snooping through European data stored on US data centres/servers and ones like FB pull out of EU like they promise…
Yeah. @Matt_C mentioned the same thing regarding ETFs. So VWRL does exactly what I am doing, but will probably cost me less. I guess I might switch my ÂŁ300/month just to VWRL.
Why FANG+ stocks ? Well it seems fun and excitely to see that with their current growth and with my £100/month, in 15 years I may have £1Million. Obviously that might not happen, but it’s worth a risk. No ?
Some good points raised. I think it’s a solid plan, home bias aside. To clarify, it is cheaper to buy regional ETFs than, for example, VWRL. @Scrooge_McCodf’s guide on buying the world with an annual charge of 0.116% (versus 0.23% for Vanguard’s global all-cap fund) may be of interest.
For each ETF, you should look at the management costs (the smaller the better) and fund size (the bigger the better) on justetf.com. Apart from that, your pie looks good
By the way, you could simplify and just go with MSCI world ETFs. You would get a good selection of companies directly from one product (the standard MSCI world index follows the performance of the 1500 best western companies for example).
It might be cheaper, but for a saving of 0.11% is it worth it?
If you could match the weightings like for like, then effectively over a 5 year period, you would only save 0.55%.
If you drill down - VWRP aims to track the performance of the FTSE All-World Index, by directly holding securities, and can hold cash. Is it worth monitoring the FTSE all world index?
as I’m just some rando on the internet.
a better investment than FTSE 100 can be investing in tuna cans 
I’m doing pretty well without relying on ETFs for managing my own risk.
