Bonds or not?
DropD
Posts: 10 Forumite
I'm looking at investing a smallish sum of around £5k into a S&S ISA and going on a 60/40 split. At the moment I'm considering keeping £2k in a NS & I Growth Bond at 2.2% and purchasing a Vanguard Lifestrategy 100 for £3k.
I'll be hopefully contributing around £250 every quarter and keeping fund for approx. 7.5 years.
I'm considering this as have read few articles regarding bonds and they maybe not offering the same 'security' that they have previously.
Grateful for any thoughts on this approach v. just going for a Lifestrategy 60.
Thanks
I'll be hopefully contributing around £250 every quarter and keeping fund for approx. 7.5 years.
I'm considering this as have read few articles regarding bonds and they maybe not offering the same 'security' that they have previously.
Grateful for any thoughts on this approach v. just going for a Lifestrategy 60.
Thanks
0
Comments
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If you don’t need the access to the funds for 5 years + and have an emergency fund then a managed fund with a split between bonds and equities isn’t a bad option.
While your NSI saver is secure, as it stands you’re losing money in real terms due to the rate of inflation. With a managed bond/equity fund, there are no guarantees, but you ‘should’ get returns greater than inflation over the long term.
There is concern over bonds being too expensive (and have been concerns for the last 5 years plus), as they should theoretically perform badly as interest rates rise.
But a balance between bonds and equities should reduce the risk compared to going for a pure equity fund/tracker like VLS 100.
It’s very easy as an uninitiated individual to enter the investing world and get overawed by the number of funds available. An ‘all-in-one’ tracker like VLS 60 isn’t a bad option and gives you good diversification. Not by any means a perfect solution, but many like it.0 -
[FONT=Verdana, sans-serif][FONT=Verdana, sans-serif]2.2% Bond from NS&I is 100% secure, its completely different from the corporate and government bonds which most people think will fall in value over the next few years.
[/FONT][/FONT] [FONT=Verdana, sans-serif][FONT=Verdana, sans-serif]VLS60 would mean about 40% of your investment is going into these government and corporate bonds.
[/FONT][/FONT] [FONT=Verdana, sans-serif][FONT=Verdana, sans-serif]I would stick with your current plan of a split between equities and cash.[/FONT][/FONT]0
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