First, I think you have made the right decision to avoid this IFA. 3% upfront fee is a very large sum to pay for advice that you can get for free on this message board. After everything is set up, there's little use in paying an annual fee that will add up to tens of thousands. Sure, we don't all agree with each other... but neither do financial advisers. As long as you get the big things right, none of which are particularly complicated, the small tweaks aren't going to change your investment return by a percentage point, which is what you'd be paying to this adviser.
That is, don't sweat the small stuff. Trying to optimize and get things perfectly right might just lead to inaction, which is worse than any of the choices you could have made.
The one key thing to get right is to not adjust your investments for emotional reasons. If you see stock prices going up and fear that you are missing out, then sell all your bonds and invest in stocks... bad idea. If you see stocks crash and you panic, then sell all your stocks... bad idea. Ultimately, it doesn't matter a whole lot if you have 80% stocks, 70% stocks, or whatever else it may be... changing that percentage in response to market trends is where people mess up. The simple rule of markets is "buy low, sell high," -- but this adjustment leads people to effectively "sell low, buy high." Stock markets are pretty much flat on most weeks, then suddenly jump/drop in response to some news event. You don't want to make investment decisions after that news event has already happened. Note that this is very different from a rule such as "I will target (110 - MyAge)% in bonds and adjust every year at the beginning of April." The latter is unrelated to market movements and so not a problem.
That is, don't sweat the small stuff. Trying to optimize and get things perfectly right might just lead to inaction, which is worse than any of the choices you could have made.
Bogleheads are big fans of Vanguard because of their low fees. Personally, I have 100% in VWRA, which is very close to the fund you are describing (I think it's VAFTGAG?) for non-ISA accounts. The reason this fund doesn't have any bonds in it is that you can create your own mix by combining it with a fund that contains only bonds. So people like me can have 0% bonds, and people who are more concerned about swings in the value of their portfolio can put some percentage of their money into a bond fund. Those tend to be better solutions than funds with fixed percentages because you might want to adjust them over time. Perhaps as you get older, you want to increase your bond share.My cousin has an ISA with Vanguard. He's been invested in the FTSE Global All Cap fund for a while. It's diversified across different countries and company sizes, which is meant to be good. Although its asset location is 100% shares, which I'm curious about, as a mixed asset location is meant to be good from what I've heard (which might be wrong), but this fund is 100% shares although diversified across the world and various company sizes. Does global diversification offset a 100% shares asset allocation? I'll read into this to learn more. I might be talking complete rubbish after picking up on bits of information here and there, but I'm keen to learn.
The one key thing to get right is to not adjust your investments for emotional reasons. If you see stock prices going up and fear that you are missing out, then sell all your bonds and invest in stocks... bad idea. If you see stocks crash and you panic, then sell all your stocks... bad idea. Ultimately, it doesn't matter a whole lot if you have 80% stocks, 70% stocks, or whatever else it may be... changing that percentage in response to market trends is where people mess up. The simple rule of markets is "buy low, sell high," -- but this adjustment leads people to effectively "sell low, buy high." Stock markets are pretty much flat on most weeks, then suddenly jump/drop in response to some news event. You don't want to make investment decisions after that news event has already happened. Note that this is very different from a rule such as "I will target (110 - MyAge)% in bonds and adjust every year at the beginning of April." The latter is unrelated to market movements and so not a problem.
Statistics: Posted by HKexpat — Thu Apr 04, 2024 12:02 am — Replies 10 — Views 946