Best Way to Invest £20,000 ISA Allowance? Rate My Strategy

My Stocks and Share ISA Index Fund Investment Strategy

It would be great to get some advice and what you think on my investment strategy.

So we £20,000 per year to invest in our S&S ISA.

Here is what I’m splitting up my portfolio into and diversifying (or maybe not so)

Portfolio 1 - Money Market Fund
Lyxor Smart Overnight Return (CSH2) - 100% £7K

Invest £7000 per annum in portfolio 1

Portfolio 2 - DIY All World (to keep low fees at 0.09%)

  1. Vanguard S&P 500 - VUAG (64%)
  2. Vanguard FTSE Developed Europe EX-UK - VERG (16%)
  3. Vanguard FTSE Emerging Markets - VFEG (10%)
  4. Vanguard FTSE Japan - VJPB (6%)
  5. Vanguard FTSE 100 - VUKG (4%)

Invest £6500 (per annum) in portfolio 2

Portfolio 3

  1. 60% (FOUNDATION/BASE) - S & P 500 Stock SPXP or VUAG
  2. 20% (SAFETY) DIVIDEND SAFETY HIGH YIELD - Vanguard All World High Dividend Yield - VHYL
  3. 20% (RISK)GROWTH - Invesco Nasdaq 100 EQQQ or EQGB

Invest £6500 per annum in portfolio 3

All in all that will be our £20,000 invested for the ISA allowance.

What do you think?

I’m pretty much set on portfolio 1 and portfolio 2.

I just think portfolio 3 could do with some work, with the Safety ETF and the High Growth ETF.

Many thanks.

I have very similar to your 1 and 2.
Trying to replicate FTSE All-World index. The cheapest single ETF I know of is Invesco FTSE All-World FWRG with a TER of 0.15%. Yours is 0.954%.
What I’m doing different is I’m using non-vanguard funds with slightly lower fees and using the distributing version so I can rebalance when reinvesting the dividend.
I have my Money Market Fund not in an ISA to use my tax allowance. £7000 over the last 12 months in CSH2 would be £382 and I’m using ERNS. It has a higher fee, 0.07% to 0.05% but I prefer the distributing ETF to keep track of dividends in case I ever go over the allowance.

Bear in mind ERNS according to BlackRock is not a mony market fund, presumably it goes for some riskier corporate bonds for higher returns.

FWIW I invested in a managed fund for the first couple of years whilst I learned the basics of invest and forget ETF investing.

There are one or two good YouTubers who are very good. The ones I found to be best were all U.K ones.

I ended up with a very much simpler portfolio than yours.

Have you checked out Just ETF?

Seems to me a complicated way to make an All-World emulator plus some Money Market (as EQQQ and VHYL neutralise each other’s tilts).

For an easier life, why not buy FWRG (or VWRP if you prefer established etfs) plus CSH2 for not much more money, and end up at a similar place.

(For info. I used the Morningstar Portfolio X-Ray Tool to compare - useful to check sector and region breakdowns. Sector allocations are similar, a bit more America than the A/W).

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Try to minimise the fees.
I think XNAQ is cheaper than EQQQ. Do check though.
Thanks for sharing.

My take on portfolio 3. Transfer of ISA as cash from Nutmeg and lump sum invested as:

Core: LGGG - 30%
Stability: VHVG - 30%
Growth: IITU - 25%
SMGB - 5%
Cash to invest when markets dip CSH2 - 10%

TER 0.17%

Monthly investment of £1666, auto invest, set and forget.

Thoughts please.

There is no “best way”. That said, this seems unnecessarily complicated.

Investing so much of your money in a money-market fund every year is extremely risk averse. I’m also not sure why you’re investing twice in the S&P 500.

I would suggest consulting a professional financial advisor.

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