VLS 60 buying more now ok?

roxy28
roxy28 Posts: 670 Forumite
First Anniversary
in Savings & investments
I want to add to my above fund again before april, should i just bang it in and not worry its buying less as its price rises.
:T
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Comments

  • dunstonh
    dunstonh Posts: 116,294 Forumite
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    roxy28 wrote: »
    I want to add to my above fund again before april, should i just bang it in and not worry its buying less as its price rises.

    Do you have the risk profile and behavior for that fund? Your question suggests you may not. You are going to suffer a 30% loss at some point. Could be tomorrow, next week, next month or next year. When you invest is not going to change that.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • roxy28
    roxy28 Posts: 670 Forumite
    First Anniversary
    dunstonh wrote: »
    Do you have the risk profile and behavior for that fund? Your question suggests you may not. You are going to suffer a 30% loss at some point. Could be tomorrow, next week, next month or next year. When you invest is not going to change that.

    The way you put the 30% loss at some point does make me nervous, so yes you are right as a fairly new investor i did not fully understand that it was certain there will be as big a loss as that.I know there is always risks about the ups and downs.
    :T
  • dunstonh
    dunstonh Posts: 116,294 Forumite
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    The way you put the 30% loss at some point does make me nervous, so yes you are right as a fairly new investor i did not fully understand that it was certain there will be as big a loss as that.I know there is always risks about the ups and downs.

    It is common for new investors to focus on the upside and not fully understand the downside. That 30% will happen at some point. its not a case of if but when. There will be more frequent 15% loss periods too. Whilst experienced investors will shrug their shoulders and think "here we go again" when the drop occurs, new investors very often get their nerve tested. Some can handle it and every crash that occurs after that gets easier. Some can't and panic and pull out. You typically know the ones that have panicked in the past as they will say they will never invest on the stockmarket again as they lost money. What they are really saying is that they didnt understand what they were doing and invested above their risk profile and have closed their mind to understanding what they did wrong. Don't become one of those.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Audaxer
    Audaxer Posts: 3,506 Forumite
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    dunstonh wrote: »
    It is common for new investors to focus on the upside and not fully understand the downside. That 30% will happen at some point. its not a case of if but when. There will be more frequent 15% loss periods too. Whilst experienced investors will shrug their shoulders and think "here we go again" when the drop occurs, new investors very often get their nerve tested. Some can handle it and every crash that occurs after that gets easier. Some can't and panic and pull out. You typically know the ones that have panicked in the past as they will say they will never invest on the stockmarket again as they lost money. What they are really saying is that they didnt understand what they were doing and invested above their risk profile and have closed their mind to understanding what they did wrong. Don't become one of those.
    I'm also considering VLS60 and looking at the last 5 years history, the returns have all been positive, unless I've misunderstood the figures. I'm sure there will be ups and downs, but you seem very certain about 30% losses. How often do they occur?
  • masonic
    masonic Posts: 23,235 Forumite
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    Audaxer wrote: »
    I'm also considering VLS60 and looking at the last 5 years history, the returns have all been positive, unless I've misunderstood the figures. I'm sure there will be ups and downs, but you seem very certain about 30% losses. How often do they occur?
    Based on recent history, every 8 years or so. We are about due another.
  • Ray_Singh-Blue
    Ray_Singh-Blue Posts: 507 Forumite
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    I think VLS60 could fall further than 30%, if the world suffers both rising interest rates and falling equity prices, at the same time.

    I can imagine a fall of 40% or even 50%, probably drawn out over about 2-3 years.
  • Gadfium
    Gadfium Posts: 763 Forumite
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    Audaxer wrote: »
    I'm also considering VLS60 and looking at the last 5 years history, the returns have all been positive, unless I've misunderstood the figures. I'm sure there will be ups and downs, but you seem very certain about 30% losses. How often do they occur?


    The LifeStrategy funds havent been running for many years. And equities have been pretty much on the up since the last financial crisis in 2008, so the numbers won't show a drop.

    When, not if, we have another crash then your equities will do something like this:

    SPX_DJUBS_20120224.jpg

    They will recover, but it may take a number of years. Are you prepared for that? Can you handle a30-40% crash and a three/four rear recovery?

    The upside is that stocks are a lot cheaper to purchase when the a*se has fallen out of the market, so purchasers at the bottom will be quids in in the long term.
  • dunstonh
    dunstonh Posts: 116,294 Forumite
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    Audaxer wrote: »
    I'm also considering VLS60 and looking at the last 5 years history, the returns have all been positive, unless I've misunderstood the figures. I'm sure there will be ups and downs, but you seem very certain about 30% losses. How often do they occur?

    An economic cycle is around 10 years. These funds have only been running around 5 years. The period they have existed is only in mostly positive years. The 30% loss potential is within their volatility range.

    You would expect 15%-20% losses every 2-4 years and 30% perhaps once in 10 years. However, its like predicting a house in a flood plain with a 1 in 50 year flood potential. It doesnt mean they will be 50 years apart. You could get two in two years.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • jdw2000
    jdw2000 Posts: 418 Forumite
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    It's for this reason that I'm not bothering having a trading account.

    I have my pension (VLS80), my ISA (VLS60) and anything outside of those will be 3% interest bank accounts.


    That being said, VLS60 has not witnessed a crash yet. It may be more sturdy than people think. Guess it depends where the crash is emanating from.
  • jdw2000
    jdw2000 Posts: 418 Forumite
    First Anniversary First Post
    So, how much much cash (or what percentage of your investments) do people here keep as cash in order to take advantage of the next crash?
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