But if you invest in say ftse dev world, msci world or ftse all world index etc you are still getting a large exposure to the US and currency fluctuation risk. Plus the UK hasn't exactly done well since about 2009. Plus the UK hasn't exactly done well since about 2009
If you invest in a ftse all world index, ftse dev world or msci world etc you are still getting a large exposure to the US and currency fluctuation risk
That’s exactly what Japanese like. They want to get foreign exchange exposure (without paying big spread). Japanese are escaping from their own currency
Thank you so much! Glad you enjoy the editing I sometimes watch them before launching and think Damien… what the hell you playing at here. This is a finance video
Would be great to see a video going over all the aspects of VWRL as I’m sure many people will be using or considering this fund. Things like past performance, geographical spread, how often it pays out and how that process works, etc. for people that find the info on Vanguard’s website confusing.
That final point you made about what is and isn't actually in your control was a really good one. People, myself included, get sucked into that trap too often. Great video as always Damien!
I love how you really focused on the psychology and strategy versus your own self and what works for you at the end. Great insight, really similar to myself I have to say. Thanks Damo mate.
Thank you for your honest opinion. I agree with you on 90% in global index for a better sleep and remaining 10% you can enjoy in putting on some individual stocks, gold or crypto.
I've only been investing for a couple of years and I've seen on many RUclips channels the advice to diversify by going 50/50 S&P500 and Global, but, as you point out, by doing this the portfolio is heavily weighted towards US stocks and the cost of the Global fund is quite high (by Vanguard's standards). What I have done is to invest 50% in the S&P500 but then invested the rest in funds which together make up the rest of the world, Developed Europe ex UK, FTSE 100, Emerging Markets and Developed Asia/Pacific. This keeps the US stocks down to 50% and also reduces the charges. Like I said, I'm a Newbie so if I'm missing something please let me know. Great channel by the way.
I had a very similar portfolio up until recently, with 5 ETFs covering S&P 500, Developed Europe ex UK, FTSE 100, FTSE Japan, and emerging markets. I really liked that way of doing it and it is nice being able to clearly see which regions are doing well at any given time! Now I have decided to just do the same with 2 funds. A developed markets index ETF and an emerging markets index ETF. The first 4 ETFs I mentioned above are all covered by a developed markets index, whilst still keeping emerging markets separate allows me to control the proportion I want between developed and emerging. Also, there are some very low fee developed markets indexes out there when you shop around!
Correct 50/50 creates a massive overweight in US stocks. The only issue I see with your strategy is you will need to often rebalance your weighting to ensure there’s not any over exposure etc. effectively timing the market which historically is not good. Personally a set and forget is ideal for most small investors and to focus their time on improving skill sets to earn more money to invest more capital. Instead of wasting time worrying about a few basis points. Just to be clear I understand your reasoning and strategy 👊🏽
Well said at the end, applies to everyone. Bonds : no one appears to talk about these and makeup of their portfolio but appreciate the common theme is 20yr+ strategy.
Thanks damo great helpful video and i am now investing in global all cap and not going to tinker or worry about what etfs to invest in etc, sold all my etfs and now going all im on one fund as same as you its easy to over complicate things, simple and easy 😊
Surely though, while a global fund (such as the FTSE all caps) is heavily weighted to the US at the moment, if in the future the US does slide significantly and other economies take over, the fund will automatically rebalance? Therefore a 50/50 split between an S&P fund and an All World fund only overweights the US at the moment, but that won't necessarily always be the case?
Agreed. This comment supports just going for a FTSE All World, with the peace of mind knowing it'll balance if macroeconomic factors move things. I just need to calculate how much more it'll cost in fees. (Not financial advice)
What an absolutely fantastic vid. Great to get your mindset and see the reason behind your choices, even if in the moment they may lead a slightly lower number. The logic around the no touch approach.
Always great videos! Watching them from someone who failed miserably at Maths at school. Now at 44, you’ve got me engaged about investing. So thanks 👏👏👍
Really appreciate the effort, i would definitely say that the quality of your videos actually encouraged me to start investing journey in UK ..Thanks Damien for telling the stuff so calmly yo avoid this panic behaviour in investment strategy
So so grateful for this one, Damo! These are the questions I really needed answers to, but I was too stupid to actually formulate the question 😁 It was also really reassuring from 09:50 onwards to feel like I'm not the only person in the world to do daft things. THANK YOU 🥰
I do only FTSE Global All cap, but it's more for my peace of mind, the fact that I can rest knowing that if an economy collapses I'll be relatively covered. Ultimately trying to game to get the best return is a bit futile, just invest in something that you can sleep at night and do it regularly
Nice one Damien. I am very similar to you in how I think and its good to see I have already come to the same conclusion as you and stuck with the global index vanguard!
Good to see you’re doing well Damian. Interesting topic. Looking at global index funds outside of Vanguard the HSBC FTSE All World looks good with a low fee of 0.13%.
@@tazzer6959 Interesting, I’ll have to look into that one. Edit: ok so the difference is that PRWU is developed world only while the HSBC is a true All-World fund (developed world & emerging markets)
Solid advice as usual. I do Life Strategy 100% and s&p ETFs. Seems to be doing the job. Pay it and forget it and if I'm lucky enough to be alive in 30 years I'll spank it all like a 90s stockbroker.
I'm a bit older than you and started late so I'm gonna go for the (currently) higher return of the Vanguard S&P for my SIPP, but if things change I'll move it into the global Index. I'll cross that bridge when I come to it.
Think carefully what you are saying? You have limited Time and are going to have a punt on past performance in the hope for future profits and if it goes wrong you will potentially sell a badly performing fund at a low and exchange it for a potentially better fund at a higher cost. That’s called timing the market. Keep researching and come up with a more balanced approach strategy.
@@NoNonsenseJohnson who said he/she/they will sell at all? If the chosen fund is a distributing one, it could very well be living off of the dividends. Why does anyone have to sell their funds at a low? The overall total percentage growth will be still quite good. Plus not everyone wants to reach FIRE and apply the 4% rule. There is no good or bad when it comes to diversified index funds like S&P500 vs. Global Index. And even if the US market underperforms on a 30year period, guess what, it does not matter, as the overall return will be a winning return in either case, unless the whole world collapses. On the other hand, the biggest threat is changing strategies all the time and creating taxable events. This is a nice way to lose money for sure. But no one speaks about that, because we are all focusing on the absolute total return over a long period of time. True wealth is built on simplicity and a strategy that allows you to be consistent and sleep well at night.
This was a video I didn’t know I needed. Been thinking about my portfolio being heavily dependent on US stocks, but didn’t feel there was a worthy solution till this vid. Thanks!
It’s worth mentioning the exchange rate implications here.. When investing in overseas markets a strengthening pound will reduce your returns. A weakening pound improves your return
In your video you say that investing in a global fund means you don’t have to worry about FX rates… but from what I’ve seen most global funds are not hedged so are subject to FX fluctuations… the weak pound helped my portfolio a lot last year (btw love your videos, thank you for the content)
@@mdubaj Yes sorry i should have clarified this more, FX impact is there especially exposure to the dollar with a 65% allocation to that market, what i meant was I am exposed to all manner of currencies through a global approach and I really just work on the basis of it will all average out in the end. I don't change my investment strategy as a result. Also long term the pound has fallen against the dollar and if that trend continues i do ok anyway.
Maybe FX could be a topic discussed in a future video… after all, Argentinian stock market returns have smashed the S&P 500 (just a shame their currency tanked too 😂)
Funds will usually offer the ability to invest in the currency you want to take the investment in. Could you not just pick the currency share class of the fund in your home currency and remove the fx fluctuation on your investment?
Great video with Your style of editing! Awesome work Damien! Over 2 years ago I didn't know anything regarding investing. I was thinking investing is for people who have a lot of money. With your help I have started investing and slowly diversyfy my portfolio. Thank you so much for what you do! 👏👍🖖
Insightful perspective. A global index fund would be less stressful. I'd also be wondering in hindsight whether I should've gone with the S&P 500. But given the US federal government's militarism and interventionism abroad, forcing countries to de-dollarize, I think you've made a very wise choice in going with a global index.
Recently retired and looking at options on where to invest my pension pot. Getting advice from professionals but have decided to keep some pocket money back to do a bit of investing. These videos have been interesting and entertaining. I’ve started off by buying some S&P500 and a global index. Thanks for making what I thought was a dull subject that I thought I’d never get my head around something I can dabble with and enjoy.
Thank you for this, it really is nice to see the perspective of an investor who is not based in the US. As a US investor I often feel a bit crazy buying our equivalent of the total world index VT. So many people around me fall victim to home country bias and see no point in buying the world market when the US has done so well. It's not that I think the US won't do well going forward.... I just don't know. What I know is the world SHOULD do well.... My IRA and workplace 401k are split between US/International to match market cap weights... it's just nice to see there are others out there in other countries who share the same idea as me.
Home bias is a thing here in the UK also even with our market not doing well! In the same way the "America is all i need" approach is heavily touted by many here. I think you have put it really well. We don't know if America will do well but the world should. If it doesn't well we are screwed anyway haha
Home country bias is not all that bad. There’s research showing that people in developed countries achieve best risk adjusted return when they invest 35% in home country. Think about Canada’s stock market represents only 3% of global value, that’s 30% higher. For Americans where the U.S. stock market is 60% of global market, 30% on top of 60% is 90%. And so all in S&P really isn’t bad investment if you are American.
Being closer to retirement I decide to do 50 50 on sp500 and vwrl, the reason being I will be taking money out so will simply take out of the one that's doing the best. I get to benefit from the lower fees on the sp500 on half the amount. Vanguard platform fee should be reduced vastly because I can get the same funds through hargreeves landsdown but with a fixed fee of £45 per year no matter how much I have in there and the vanguard fee is limited to £375 so that is a big saving each year
Also going for the global index here. What would you say for their big TER discrepancy though? The S&P is significantly cheaper. Thanks for the content!
Great fund and one i heavily considered, but at about 72% US, I figured i might as well go all in US with Fidelity Index US P Acc. This is a fund domicilled in the UK which is what i wanted as opposed to usual VUSA/VUAG etf Ireland domi.
How about a compromise and add to the S&P 500 ETF a STOXX 600 in the relative proportion like you have on the MSCI world index, about 35% and call it a day? You can have a ETF with 0.07% TER for low cost and diminish the US only exposure. European companies have exposure to Asia markets and you benefit from it also.
You see things so clearly Damien, superb video For myself, I’ve always been an avid saver & investor throughout my life and done quite well I think being 67 in a week! But I’ve always been surrounded by nay sayers saying invest in domestic property, which has also done well. So my question is have your peers been saying similar and how do you respond?
I opted for a s&p 500 etf, an EU and a "developing" rest of world fund. This way I can control the percentage invested in each region myself. But .. its hard to see the EU region performing well over the next 10 years and events in America will hugely impact the EU anyway so it's not great for diversification either. So I opted to reduce the amount i invest into the EU region and increase the rest-of-world investment.
Your outlook on the economies you're investing in is completely irrelevant. If you can't see the EU performing well so does market which will price European equities accordingly. That's why Europe has a lower P/E ratio than the US. That does not mean that those markets will underperform
VWRL for the win - I've been building this one up for MONTHS because I too am an idiot. The hands off approach, being a rational optimist and expecting the world to grow makes this ETF an obvious choice! 📈
In the first 25 years of your investing life, the amount you save and invest has a far bigger impact on the growth of your wealth than your returns. Global index is the way to go.
Question. The global funds (e.g. vwrl) has 60 odd percent weighting to US currently. Presumably because of the market cap of this country stocks? Apple etc? So if the US goes through a period of underperforming say against Europe or china would that weighting swing towards China as chinese business grow? I guess my question is what decides that c. 60% US weighting in VWRL and what was their weighting like back in the 90s when japan was dominant for example? My assumption is it wasnt always US heavy and it'll flex to where the money is in the economies of the world. Would i be right?
VWRL and other similar funds will rebalance every so often to reflect the capitisation weighting of the index it tracks. In other words, yes you're correct.
Loved this video, so helpful! Would appreciate a video covering your thoughts on a SIPP/the pots you have going for your retirement. Thanks for the great content as always
It's good to be reminded about this stuff. I don't retain everything I read/learn about as I'm not 'in it' every day, so this was really valuable. Cheers!
Agree with the global approach. I think in the US over the next decade is likely to be a stock pickers/sector pickers market. AI, infrastructure plays and stocks that can benefit from higher inflation for longer will still do well as well as will some healthcare plays. My only issue is the Global ETF's available still consist of roughly 65% US companies, and most of the other allocations are in UK, Europe and Japan, countries that are likely to see slowing growth to (Japan might outperform). So your Global fund consists almost exclusively of economies with slowing growth. Unless I've missed a good Global ETF that has a good share of South Korea, Brazil, India, Mexico etc? 50% US, 30% established economies, 20% politically stable Emerging markets would be ideal for me.
Really good video and it's on par with what I was thinking recently too... I've always bought MSCI Global Islamic and their USA counterpart but I suspect things are about to shift but realising over 60% of Global is still USA is good to know so thank you once again Damien.
Damo, you might not realise it yet but you are a modern day prophet. Thanks for your help in spreading honest information to those who may never receive it.
I'd love to see a global index fund that doesn't include Apple, Alphabet, Microsoft, Amazon, Nvidia and Tesla, does one exist? These names always seem to come up in the top 10 when ordered by weight, all my efforts to add a bit of diversity to my investments always seems to be thwarted by the same names at the top of the list.
I don't think a 50-50 approach is all that bad, nor do i think s&p only or Global only. Global and S&P seem to be the best bets, so why not diversify a bit.
It’s not diversifying buying essentially more of the same thing. Global all cap is 63% American stocks which effectively consists of the S&P 500. So in lamens term over 50% of the global fund is the S&P500.
The great advantage in investing in world indexes is that whichever countries wins, we win: we don’t know if and when China will take over the US dominance, or maybe there is a sudden change of balance and Indonesia suddenly becomes the leader in a few years, or Canada, The UK, Australia and New Zealand unite and form a new super productive superpower…. in any case, a global index will adapt, so if in 50 years from now US stocks will be worth nothing compared to Indonesian stocks, then your index will be full of them. If nothing changed and the US stays the leader, then your index keeps following the US. You are always siding with the winner, therefore winning yourself every time
This concept of the fund constantly rebalancing without any emotion and to a degree cost to the holder is probably the most important reason to invest in world indexes, that and diversity. The only downside is the dividends aren't that great.
Glad to see youve recovered and your video quality is still S tier 👌 Im gona try and create a gobal portfolio with lower fees. 60% SPXP fee .05% S&P500 4.28% ISF fee .07% FTSE 100 0.72% VMID fee .11% FTSE 250 10% XUEK fee .09% EURO 7.5% VJPN fee .15% Japan 7.5% VAPX fee .15% Asia 10% HMEF fee .15% Emerging Kinda follows VWRL though its a little more work, the fees are quite a bit less. Not gona lie though invested into single stocks during the bull run 😅 still super heavy into UK right now. Looking to trim down if things get better.
Great vid again. I'm constantly tinkering to the point I'm getting on my own nerves. The VUSA is overvalued at moment and keeping some cash back for when or if it crashes
Great video as always. One comparison I’ve wanted to see is the Global All Cap vs 100% life strategy. Is there any point moving across to the all cap? Or take the bet on the UK weighted market with the LS.
To me most other countries face more problems than the USA. From social systems to borders close to aggresive neighbours while the USA mindset is mostly USA first which helps the growth of some of the most powerful companies we see today. I am European and my bet is still the USA. We will see who is right in the next 50 years. And even if the S&P500 isn't outperforming the global market for a while it doesn't mean it won't give you enough return to beat the inflation.
This video is excellent. The honesty and transparency is quite unique here. Personally, the way I made peace with my decision is thinking that I am a working class person, investing some money in the stock market but nothing that would be life changing in terms of returns. At this point in life, I’m better off using my time to make more money than overthinking the very little I’m able to invest. This strategy meant that I managed to grow my anual income by £10k in the past year. I’ve been putting all my investments in S&P500 and don’t even look again or think about it. When I get to a point that I have a significant amount of capital to invest, then it will be the time to spend more time and effort to study my options. I see my investments as a top up on my retirement in 30 years, I simply don’t have enough to invest with mortgage and all life shenanigans to get any life changing returns, so it doesn’t seem worth to overthink it.
Excellent mindset. Invest in yourself first to maximise your income instead of worrying about percentage points on small amounts of money. Invest hold and forget… good luck I’m sure you will prosper greatly with your mind frame 👊🏽🤝🏽
Damn ..that last point can not be underestimated. By pulling the focus to what you do have control over financially it builds a habit far more worthy of our time than checking graphs.
We can't know for certain how ex-US companies will perform compared to US. But betting on US is still a solid and safe bet, but so is diversifying with international funds like Vanguards VXUS. Since the inception of Vanguard's Total International fund in 1996, it has beaten the S&P 500 10 out of the past 27 years. Both US and International funds correlate highly with slight deviations that mostly favor the US but sometimes favors international. Whether you go all in US or diversity into international, what matters is staying the course and not constantly tinkering with your portfolio. Over 10, 15, 20+ years, you will very likely come out with an annualized return of 7-11%.
I have a life strategy 100 fund vanguard. I listened to all your advice an decided to “Just buy the haystack” And I’ll stick with it, there’s bound to be strong interest
Do what feels right for you. If that means overweight on UK and you are comfortable with that, it's not an issue. None of us can predict the future with any degree of confidence.
The thing about the US is their ability to put muscle other nations is unparalleled so I’ll bet on them while also looking elsewhere at a lower volume just to diversify.
Great vid! Didn’t you say All world has avg return of 10% over the years? But then mentioned at the end an avg return of 8.3%? Was that just factoring in inflation rates?
Here to say I am also an idiot
Me too 😊
We know 😂.
*also puts hand up*
I am also an idiot. If I think I’ll probably get it wrong
Virgin British finance youtuber: Buy the World
Chad American finance youtuber: USA USA USA!!!!!!
I was thinking about this very issue lately and came across your video - very helpful, thank you!
Outside of the US, with S&P500 you're also taking exchange rate risk. It can work in your favor or against you.
But if you invest in say ftse dev world, msci world or ftse all world index etc you are still getting a large exposure to the US and currency fluctuation risk. Plus the UK hasn't exactly done well since about 2009. Plus the UK hasn't exactly done well since about 2009
If you invest in a ftse all world index, ftse dev world or msci world etc you are still getting a large exposure to the US and currency fluctuation risk
That’s exactly what Japanese like. They want to get foreign exchange exposure (without paying big spread). Japanese are escaping from their own currency
I am all in on S&P500.
If I am going to heavily invest in the American market either way I might as well go all in.
Same.
I look forward to these videos, the quality of production and the content is always epic! Great job!
Thank you so much! Glad you enjoy the editing I sometimes watch them before launching and think Damien… what the hell you playing at here. This is a finance video
Wonderful direction and music
Fantastic production value and brilliantly concise and wry delivery of good content.
@@DamienTalksMoneyahh mate don’t change, you have the perfect balance of humour to quality seriousness
Great
Great video! I go all on VWRP, every month. The set it and forget it nature works best to distract me from those 'shiny things'
I was thinking about VWRP as well. Does the dividend go automatically back to the investment?
I've just been investing in the S&P500 for the past 18 months now
Would be great to see a video going over all the aspects of VWRL as I’m sure many people will be using or considering this fund. Things like past performance, geographical spread, how often it pays out and how that process works, etc. for people that find the info on Vanguard’s website confusing.
Yes I would love that tooo...
Do you invest into the VWRL?
Isnt VWRP better?
That final point you made about what is and isn't actually in your control was a really good one. People, myself included, get sucked into that trap too often. Great video as always Damien!
I love how you really focused on the psychology and strategy versus your own self and what works for you at the end. Great insight, really similar to myself I have to say. Thanks Damo mate.
Thank you for your honest opinion. I agree with you on 90% in global index for a better sleep and remaining 10% you can enjoy in putting on some individual stocks, gold or crypto.
Loving the new editing and big fan of the podcast. Keep it up!
Just found your channel, its brilliant. All u say totally makes sense
Thank you!
I've only been investing for a couple of years and I've seen on many RUclips channels the advice to diversify by going 50/50 S&P500 and Global, but, as you point out, by doing this the portfolio is heavily weighted towards US stocks and the cost of the Global fund is quite high (by Vanguard's standards). What I have done is to invest 50% in the S&P500 but then invested the rest in funds which together make up the rest of the world, Developed Europe ex UK, FTSE 100, Emerging Markets and Developed Asia/Pacific. This keeps the US stocks down to 50% and also reduces the charges. Like I said, I'm a Newbie so if I'm missing something please let me know. Great channel by the way.
I had a very similar portfolio up until recently, with 5 ETFs covering S&P 500, Developed Europe ex UK, FTSE 100, FTSE Japan, and emerging markets. I really liked that way of doing it and it is nice being able to clearly see which regions are doing well at any given time!
Now I have decided to just do the same with 2 funds. A developed markets index ETF and an emerging markets index ETF. The first 4 ETFs I mentioned above are all covered by a developed markets index, whilst still keeping emerging markets separate allows me to control the proportion I want between developed and emerging. Also, there are some very low fee developed markets indexes out there when you shop around!
Correct 50/50 creates a massive overweight in US stocks.
The only issue I see with your strategy is you will need to often rebalance your weighting to ensure there’s not any over exposure etc. effectively timing the market which historically is not good.
Personally a set and forget is ideal for most small investors and to focus their time on improving skill sets to earn more money to invest more capital. Instead of wasting time worrying about a few basis points.
Just to be clear I understand your reasoning and strategy 👊🏽
Bulk of s&p does global business so you're already invested internationally by investing solely in that
I’m all in the FTSE Global all cap. Great video!
Me too
So am I. Have we made the right choice?
Yeah good choice if you can accept losing some performance
I love how Damien can create such educational content so entertaining! Thank you Damien :)
I use the HSBC All World at 0.12 fee in my pension. I use the Invesco FTSE All World in my ISA at 0.15 fee. Its a no brainer.
Do you invest in hsbc via the app or on a trading platform?
Your content is fire bro. Take a bow. Smashed it.
My man! Hope you are well mate
Well said at the end, applies to everyone. Bonds : no one appears to talk about these and makeup of their portfolio but appreciate the common theme is 20yr+ strategy.
Now that was just brilliant in many different ways. Nice one mate.
Thank you!
Thanks damo great helpful video and i am now investing in global all cap and not going to tinker or worry about what etfs to invest in etc, sold all my etfs and now going all im on one fund as same as you its easy to over complicate things, simple and easy 😊
Surely though, while a global fund (such as the FTSE all caps) is heavily weighted to the US at the moment, if in the future the US does slide significantly and other economies take over, the fund will automatically rebalance? Therefore a 50/50 split between an S&P fund and an All World fund only overweights the US at the moment, but that won't necessarily always be the case?
It does rebalance but while losing value of course
Agreed. This comment supports just going for a FTSE All World, with the peace of mind knowing it'll balance if macroeconomic factors move things. I just need to calculate how much more it'll cost in fees. (Not financial advice)
Love your content! Just found your channel and appreciate the broader perspective you give on investment.
So believably candid, I do appreciate your candor and wisdom. Looking forward to next time, cheers.
Thank you!
Thank you!
What an absolutely fantastic vid. Great to get your mindset and see the reason behind your choices, even if in the moment they may lead a slightly lower number. The logic around the no touch approach.
Always great videos! Watching them from someone who failed miserably at Maths at school. Now at 44, you’ve got me engaged about investing. So thanks 👏👏👍
Really appreciate the effort, i would definitely say that the quality of your videos actually encouraged me to start investing journey in UK ..Thanks Damien for telling the stuff so calmly yo avoid this panic behaviour in investment strategy
So so grateful for this one, Damo! These are the questions I really needed answers to, but I was too stupid to actually formulate the question 😁 It was also really reassuring from 09:50 onwards to feel like I'm not the only person in the world to do daft things. THANK YOU 🥰
My whole life is one daft decision to the next just some of them pay off
I do only FTSE Global All cap, but it's more for my peace of mind, the fact that I can rest knowing that if an economy collapses I'll be relatively covered. Ultimately trying to game to get the best return is a bit futile, just invest in something that you can sleep at night and do it regularly
Worth noting that 60% of the FTSE Global All Cap is USA. 3.92% of the global fund is Apple. 3.43% is Microsoft.
I also have the FTSE Global All cap, I am not sure if I am going down the right road, but at least I am investing.
My favourite comment here
Nice one Damien. I am very similar to you in how I think and its good to see I have already come to the same conclusion as you and stuck with the global index vanguard!
Fantastic, as always! Always end up pausing a few minutes in to stop and like the video because of how good I can tell the content is going to be.
You legend thank you
In my ISA I do just Life-strategy 100. My pension is split between VWRL and VUSA. 50/50.
Good to see you’re doing well Damian. Interesting topic. Looking at global index funds outside of Vanguard the HSBC FTSE All World looks good with a low fee of 0.13%.
Cheapest global fund in the UK
PRWU fee is 0.05%.
@@ScipioAfricanus809 indeed, the next cheapest being the Invesco FTSE All-World with a fee of 0.15%
@@tazzer6959 thanks, wasn't aware of that one.
@@tazzer6959 Interesting, I’ll have to look into that one. Edit: ok so the difference is that PRWU is developed world only while the HSBC is a true All-World fund (developed world & emerging markets)
nice job. Really like your approach to the working capital and play dough.
Solid advice as usual. I do Life Strategy 100% and s&p ETFs. Seems to be doing the job. Pay it and forget it and if I'm lucky enough to be alive in 30 years I'll spank it all like a 90s stockbroker.
What's the TER for a Lifestrategy fund?
Cheers Damien! I've been thinking about this recently so was looking forward to your take on it
I'm a bit older than you and started late so I'm gonna go for the (currently) higher return of the Vanguard S&P for my SIPP, but if things change I'll move it into the global Index. I'll cross that bridge when I come to it.
Think carefully what you are saying? You have limited Time and are going to have a punt on past performance in the hope for future profits and if it goes wrong you will potentially sell a badly performing fund at a low and exchange it for a potentially better fund at a higher cost.
That’s called timing the market. Keep researching and come up with a more balanced approach strategy.
@@NoNonsenseJohnson who said he/she/they will sell at all? If the chosen fund is a distributing one, it could very well be living off of the dividends. Why does anyone have to sell their funds at a low? The overall total percentage growth will be still quite good. Plus not everyone wants to reach FIRE and apply the 4% rule. There is no good or bad when it comes to diversified index funds like S&P500 vs. Global Index. And even if the US market underperforms on a 30year period, guess what, it does not matter, as the overall return will be a winning return in either case, unless the whole world collapses. On the other hand, the biggest threat is changing strategies all the time and creating taxable events. This is a nice way to lose money for sure. But no one speaks about that, because we are all focusing on the absolute total return over a long period of time. True wealth is built on simplicity and a strategy that allows you to be consistent and sleep well at night.
This was a video I didn’t know I needed. Been thinking about my portfolio being heavily dependent on US stocks, but didn’t feel there was a worthy solution till this vid. Thanks!
Wonderful quality video. Impressive how these improve over time
It’s worth mentioning the exchange rate implications here.. When investing in overseas markets a strengthening pound will reduce your returns. A weakening pound improves your return
Yeah I do mention them at the end but very briefly
In your video you say that investing in a global fund means you don’t have to worry about FX rates… but from what I’ve seen most global funds are not hedged so are subject to FX fluctuations… the weak pound helped my portfolio a lot last year (btw love your videos, thank you for the content)
@@mdubaj Yes sorry i should have clarified this more, FX impact is there especially exposure to the dollar with a 65% allocation to that market, what i meant was I am exposed to all manner of currencies through a global approach and I really just work on the basis of it will all average out in the end. I don't change my investment strategy as a result. Also long term the pound has fallen against the dollar and if that trend continues i do ok anyway.
Maybe FX could be a topic discussed in a future video… after all, Argentinian stock market returns have smashed the S&P 500 (just a shame their currency tanked too 😂)
Funds will usually offer the ability to invest in the currency you want to take the investment in.
Could you not just pick the currency share class of the fund in your home currency and remove the fx fluctuation on your investment?
Great video with Your style of editing! Awesome work Damien! Over 2 years ago I didn't know anything regarding investing. I was thinking investing is for people who have a lot of money. With your help I have started investing and slowly diversyfy my portfolio. Thank you so much for what you do! 👏👍🖖
Insightful perspective. A global index fund would be less stressful. I'd also be wondering in hindsight whether I should've gone with the S&P 500. But given the US federal government's militarism and interventionism abroad, forcing countries to de-dollarize, I think you've made a very wise choice in going with a global index.
This guys the real deal, love the approach. Got a subscriber!
Thank you!
Recently retired and looking at options on where to invest my pension pot.
Getting advice from professionals but have decided to keep some pocket money back to do a bit of investing.
These videos have been interesting and entertaining. I’ve started off by buying some S&P500 and a global index.
Thanks for making what I thought was a dull subject that I thought I’d never get my head around something I can dabble with and enjoy.
Nicely said. another informative video
Thank you for this, it really is nice to see the perspective of an investor who is not based in the US. As a US investor I often feel a bit crazy buying our equivalent of the total world index VT. So many people around me fall victim to home country bias and see no point in buying the world market when the US has done so well. It's not that I think the US won't do well going forward.... I just don't know. What I know is the world SHOULD do well.... My IRA and workplace 401k are split between US/International to match market cap weights... it's just nice to see there are others out there in other countries who share the same idea as me.
Home bias is a thing here in the UK also even with our market not doing well! In the same way the "America is all i need" approach is heavily touted by many here. I think you have put it really well. We don't know if America will do well but the world should. If it doesn't well we are screwed anyway haha
@@DamienTalksMoney "We don't know if America will do well but the world should. If it doesn't well we are screwed anyway" that's so clarifying lol
Home country bias is not all that bad. There’s research showing that people in developed countries achieve best risk adjusted return when they invest 35% in home country. Think about Canada’s stock market represents only 3% of global value, that’s 30% higher. For Americans where the U.S. stock market is 60% of global market, 30% on top of 60% is 90%. And so all in S&P really isn’t bad investment if you are American.
Being closer to retirement I decide to do 50 50 on sp500 and vwrl, the reason being I will be taking money out so will simply take out of the one that's doing the best. I get to benefit from the lower fees on the sp500 on half the amount.
Vanguard platform fee should be reduced vastly because I can get the same funds through hargreeves landsdown but with a fixed fee of £45 per year no matter how much I have in there and the vanguard fee is limited to £375 so that is a big saving each year
Great to see you looking well Damo. Good content
Also going for the global index here. What would you say for their big TER discrepancy though? The S&P is significantly cheaper. Thanks for the content!
I’m all in for MSCI world index fund. I chose Fidelity for the low fees.
Great fund and one i heavily considered, but at about 72% US, I figured i might as well go all in US with Fidelity Index US P Acc. This is a fund domicilled in the UK which is what i wanted as opposed to usual VUSA/VUAG etf Ireland domi.
Like your channel, subscribed. Very balanced and differentiated analysis!
Much appreciated! Thank you for taking the time to comment
How about a compromise and add to the S&P 500 ETF a STOXX 600 in the relative proportion like you have on the MSCI world index, about 35% and call it a day? You can have a ETF with 0.07% TER for low cost and diminish the US only exposure. European companies have exposure to Asia markets and you benefit from it also.
You see things so clearly Damien, superb video
For myself, I’ve always been an avid saver & investor throughout my life and done quite well I think being 67 in a week! But I’ve always been surrounded by nay sayers saying invest in domestic property, which has also done well. So my question is have your peers been saying similar and how do you respond?
Cheers mate, good to see you're more than "back on your feet".
I opted for a s&p 500 etf, an EU and a "developing" rest of world fund. This way I can control the percentage invested in each region myself. But .. its hard to see the EU region performing well over the next 10 years and events in America will hugely impact the EU anyway so it's not great for diversification either. So I opted to reduce the amount i invest into the EU region and increase the rest-of-world investment.
Your outlook on the economies you're investing in is completely irrelevant. If you can't see the EU performing well so does market which will price European equities accordingly. That's why Europe has a lower P/E ratio than the US. That does not mean that those markets will underperform
This was really interesting, thank you!
Glad you enjoyed it!
Lars Kroijer from your country preaches the same thing. Very interesting. Hi from Australia
Good to see you back 🫡
VWRL for the win - I've been building this one up for MONTHS because I too am an idiot. The hands off approach, being a rational optimist and expecting the world to grow makes this ETF an obvious choice! 📈
In the first 25 years of your investing life, the amount you save and invest has a far bigger impact on the growth of your wealth than your returns. Global index is the way to go.
You said it better than I did
What are the tax implications of using a global index fund? Does the £500/£1000 personal savings limit come into it at all?
Not if it's done in a stocks and shares isa
Why do you like to re-invest the dividends yourself?
Question. The global funds (e.g. vwrl) has 60 odd percent weighting to US currently. Presumably because of the market cap of this country stocks? Apple etc?
So if the US goes through a period of underperforming say against Europe or china would that weighting swing towards China as chinese business grow?
I guess my question is what decides that c. 60% US weighting in VWRL and what was their weighting like back in the 90s when japan was dominant for example?
My assumption is it wasnt always US heavy and it'll flex to where the money is in the economies of the world. Would i be right?
VWRL and other similar funds will rebalance every so often to reflect the capitisation weighting of the index it tracks. In other words, yes you're correct.
Alot of these Vanguard funds are in Trading 212 but with no fees, from what I can see. Vs the same fund on the Vanguard platform.
Loved this video, so helpful! Would appreciate a video covering your thoughts on a SIPP/the pots you have going for your retirement. Thanks for the great content as always
It's good to be reminded about this stuff. I don't retain everything I read/learn about as I'm not 'in it' every day, so this was really valuable. Cheers!
Agree with the global approach. I think in the US over the next decade is likely to be a stock pickers/sector pickers market. AI, infrastructure plays and stocks that can benefit from higher inflation for longer will still do well as well as will some healthcare plays. My only issue is the Global ETF's available still consist of roughly 65% US companies, and most of the other allocations are in UK, Europe and Japan, countries that are likely to see slowing growth to (Japan might outperform). So your Global fund consists almost exclusively of economies with slowing growth. Unless I've missed a good Global ETF that has a good share of South Korea, Brazil, India, Mexico etc? 50% US, 30% established economies, 20% politically stable Emerging markets would be ideal for me.
Love your content buddy, keep up the good work ✌️👍
Wow what a video. Lots of work! Great honest content 😊
Excellent - Thanks. Time for me to make a move on this.
I invest in:
S&P 500
Emerging Markets
European inc. UK
I believe this is all the global exposure I need 😊.
The only downside there are the costs, having at leasr 3 funds, means higher cost.
Thx, I was lookimg for such input to re-define the phylosophy of my portfolio, as I have mixed sp500, all-world and some others too :)
If you mix all-world with S&P 500 you are betting mostly on the same equity twice, as most of the all-world index is US.
If the dollar goes away, what happens to my s and p 500 etf?
Really good video and it's on par with what I was thinking recently too... I've always bought MSCI Global Islamic and their USA counterpart but I suspect things are about to shift but realising over 60% of Global is still USA is good to know so thank you once again Damien.
Damo, you might not realise it yet but you are a modern day prophet. Thanks for your help in spreading honest information to those who may never receive it.
By saying the US won't always be a superpower?
I'd love to see a global index fund that doesn't include Apple, Alphabet, Microsoft, Amazon, Nvidia and Tesla, does one exist? These names always seem to come up in the top 10 when ordered by weight, all my efforts to add a bit of diversity to my investments always seems to be thwarted by the same names at the top of the list.
I don't think a 50-50 approach is all that bad, nor do i think s&p only or Global only. Global and S&P seem to be the best bets, so why not diversify a bit.
It’s not diversifying buying essentially more of the same thing. Global all cap is 63% American stocks which effectively consists of the S&P 500.
So in lamens term over 50% of the global fund is the S&P500.
The great advantage in investing in world indexes is that whichever countries wins, we win: we don’t know if and when China will take over the US dominance, or maybe there is a sudden change of balance and Indonesia suddenly becomes the leader in a few years, or Canada, The UK, Australia and New Zealand unite and form a new super productive superpower…. in any case, a global index will adapt, so if in 50 years from now US stocks will be worth nothing compared to Indonesian stocks, then your index will be full of them. If nothing changed and the US stays the leader, then your index keeps following the US. You are always siding with the winner, therefore winning yourself every time
This concept of the fund constantly rebalancing without any emotion and to a degree cost to the holder is probably the most important reason to invest in world indexes, that and diversity. The only downside is the dividends aren't that great.
Glad to see youve recovered and your video quality is still S tier 👌
Im gona try and create a gobal portfolio with lower fees.
60% SPXP fee .05% S&P500
4.28% ISF fee .07% FTSE 100
0.72% VMID fee .11% FTSE 250
10% XUEK fee .09% EURO
7.5% VJPN fee .15% Japan
7.5% VAPX fee .15% Asia
10% HMEF fee .15% Emerging
Kinda follows VWRL though its a little more work, the fees are quite a bit less.
Not gona lie though invested into single stocks during the bull run 😅 still super heavy into UK right now. Looking to trim down if things get better.
Do you get paid dividends from Index funds, from the companies in those funds that pay dividends?
Excellent bit of advice to sign off on
Great vid again. I'm constantly tinkering to the point I'm getting on my own nerves. The VUSA is overvalued at moment and keeping some cash back for when or if it crashes
@Damien-TM 🤣
Great video as always. One comparison I’ve wanted to see is the Global All Cap vs 100% life strategy. Is there any point moving across to the all cap? Or take the bet on the UK weighted market with the LS.
Your guess is as good as anyone's
Great content !
Thank you!
To me most other countries face more problems than the USA. From social systems to borders close to aggresive neighbours while the USA mindset is mostly USA first which helps the growth of some of the most powerful companies we see today. I am European and my bet is still the USA. We will see who is right in the next 50 years. And even if the S&P500 isn't outperforming the global market for a while it doesn't mean it won't give you enough return to beat the inflation.
Great video. Watch out for currency swings....$1.75 to pound some years ago...
Great video!
This video is excellent. The honesty and transparency is quite unique here. Personally, the way I made peace with my decision is thinking that I am a working class person, investing some money in the stock market but nothing that would be life changing in terms of returns. At this point in life, I’m better off using my time to make more money than overthinking the very little I’m able to invest. This strategy meant that I managed to grow my anual income by £10k in the past year. I’ve been putting all my investments in S&P500 and don’t even look again or think about it. When I get to a point that I have a significant amount of capital to invest, then it will be the time to spend more time and effort to study my options. I see my investments as a top up on my retirement in 30 years, I simply don’t have enough to invest with mortgage and all life shenanigans to get any life changing returns, so it doesn’t seem worth to overthink it.
Excellent mindset. Invest in yourself first to maximise your income instead of worrying about percentage points on small amounts of money. Invest hold and forget… good luck I’m sure you will prosper greatly with your mind frame 👊🏽🤝🏽
Bingo! Too many people obsess about investing returns when that energy should be used to increase earnings because that’s the better roi.
Damn ..that last point can not be underestimated.
By pulling the focus to what you do have control over financially it builds a habit far more worthy of our time than checking graphs.
We can't know for certain how ex-US companies will perform compared to US. But betting on US is still a solid and safe bet, but so is diversifying with international funds like Vanguards VXUS. Since the inception of Vanguard's Total International fund in 1996, it has beaten the S&P 500 10 out of the past 27 years. Both US and International funds correlate highly with slight deviations that mostly favor the US but sometimes favors international. Whether you go all in US or diversity into international, what matters is staying the course and not constantly tinkering with your portfolio. Over 10, 15, 20+ years, you will very likely come out with an annualized return of 7-11%.
I have a life strategy 100 fund vanguard. I listened to all your advice an decided to “Just buy the haystack” And I’ll stick with it, there’s bound to be strong interest
Apart from the fact the lifestrategy is heavily overweight on the UK…
Do what feels right for you. If that means overweight on UK and you are comfortable with that, it's not an issue. None of us can predict the future with any degree of confidence.
Great info!
Thank you
Glad it was helpful!
I'm going all in on my indexes 🎉
The thing about the US is their ability to put muscle other nations is unparalleled so I’ll bet on them while also looking elsewhere at a lower volume just to diversify.
Great summary as always!
Great vid! Didn’t you say All world has avg return of 10% over the years? But then mentioned at the end an avg return of 8.3%? Was that just factoring in inflation rates?
Good logical thought process.
Thank you
Really useful video - thanks
Feels good knowing The sun never sets on my investments
I never comment on financial type videos… great job 👍