New Investor: VLS 100?
Comments
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Bravepants: May I ask how the funds have done for you? Are you happy with the returns you've been getting? I've read through MMM's blog a few times before, its quite inspirational and retiring early would be great.
Thank you again everyone.
My funds have done well. I started investing in 2010 or so, through a mix of drip feeding and lump sum (I dumped £15k in last year), and they show an average annualised return of about 10%. BUT this is by no means a guarantee of future performance.
In my retirement spreadsheet I have assumed 4.5% annual growth for both my ISA and AVC, a bit pessimistic to take into account the 0.5% annual charges and 2% inflation (although CPI is now 2.9% or so accordintg to BBC News this morning.) This, with my AVCs, I hope to use to retire in 6 years at 55. I'm hoping to have £300k between the two pots.
I may work a year or so longer, depending on performance. But there is no way I want to work until 67. My partner and I have no kids and a paid off mortgage in a modest house. I have a DB pension that kicks in at 60 (£17k a year) and another that kicks in at 67 with state pension too. So I have a phased plan.
I am not bothered about volitility as I drip feed mostly. At the moment this is set to £1000 per month. I may lump sum at the end of the financial year if I have cash available.
In the 6 years until I "retire", I would actually LIKE my fund value to drop, because then I would be buying cheaper. Also there is some cushion to volatility because of auto-rebalancing of the Vanguard funds every year as mentioned already in the thread.
I am also dabbling a bit with peer-to-peer, with no more than 10% of my portfolio. It's just to gain experience now in case I decide to use it in my retirement years for a bit of extra monthly income. I want to see how it all holds together while I am working instead of semi-relying on it when I leave work.
You're welcome, always glad to impart some of my rather limited experience.If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.0 -
AnotherJoe wrote: »VLS100 and HMWO do the same job, invest globally, the difference is that VLS100 is "artificially" biased towards the U.K. HMWO is invested according to countries actual contribution to the world economy.
I understand your basic point that VLS100 may be "artificially" biased towards the UK, presumably because Vanguard think that this is what UK-based retail investors will want.
But... if you look at the regional allocations for HMWO it seems that they allocate over 58% to the USA. Isn't this also "artificial", but for different reasons?0 -
I understand your basic point that VLS100 may be "artificially" biased towards the UK, presumably because Vanguard think that this is what UK-based retail investors will want.
But... if you look at the regional allocations for HMWO it seems that they allocate over 58% to the USA. Isn't this also "artificial", but for different reasons?
The US bias has done VLS when in recent years but had it been in the previous 5 years to launch, it would have been a lead weight. The higher US weightings are perhaps more of a concern than the UK.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.0 -
The US rules the world though, for now at least!
Maybe China and such are the places to invest for the future, fastest growing economy etc.0 -
I understand your basic point that VLS100 may be "artificially" biased towards the UK, presumably because Vanguard think that this is what UK-based retail investors will want.
But... if you look at the regional allocations for HMWO it seems that they allocate over 58% to the USA. Isn't this also "artificial", but for different reasons?
55% isnt particularly artificial being in the ball park of the US's share of the global equity market, or at least the developed world part of it. Unlike the case with the Vanguard LS funds, HMWO's managers dont allocate the %s. They are whatever the global index used works them out to be.0 -
The US rules the world though, for now at least!
My point is that the USA only represents nearly 60% of the world's GDP if you deliberately exclude other economies (such as that of China) - and that in itself is artificial.
I'm not saying that - for example - you should allocate to China in proportion to its share of global GDP, because there are risks within their economy that don't feature in the US. But my personal feeling is that the bias of HMWO is excessive (which is why I don't use it).
Linton: I understand what you say about just following an index - but then every index is "artificial", in that it has to have arbitrarily-defined thresholds and limits which determine which stocks appear in the index and which don't, and which countries are considered to be developed and which are not.0 -
My point is that the USA only represents nearly 60% of the world's GDP if you deliberately exclude other economies (such as that of China) - and that in itself is artificial.
I'm not saying that - for example - you should allocate to China in proportion to its share of global GDP, because there are risks within their economy that don't feature in the US. But my personal feeling is that the bias of HMWO is excessive (which is why I don't use it).
Linton: I understand what you say about just following an index - but then every index is "artificial", in that it has to have arbitrarily-defined thresholds and limits which determine which stocks appear in the index and which don't, and which countries are considered to be developed and which are not.
No, the us represent maybe 55% of the world equity market, if you invested according to economy size you'd have most of your money in government bonds.
There's also the fact that some economies aren't open, dual listing in China being an obvious example. There's also more political risk outside North America, Europe and Anzac, most companies in China are subject to political influence of not outwrite control.
It's totally up to you how you invest and allocate, might be interesting to post your current allocation for discussion purposes, up to you though.0 -
Bravepants wrote: »My funds have done well. I started investing in 2010 or so, through a mix of drip feeding and lump sum (I dumped £15k in last year), and they show an average annualised return of about 10%. BUT this is by no means a guarantee of future performance.
In my retirement spreadsheet I have assumed 4.5% annual growth for both my ISA and AVC, a bit pessimistic to take into account the 0.5% annual charges and 2% inflation (although CPI is now 2.9% or so accordintg to BBC News this morning.) This, with my AVCs, I hope to use to retire in 6 years at 55. I'm hoping to have £300k between the two pots.
I may work a year or so longer, depending on performance. But there is no way I want to work until 67. My partner and I have no kids and a paid off mortgage in a modest house. I have a DB pension that kicks in at 60 (£17k a year) and another that kicks in at 67 with state pension too. So I have a phased plan.
I am not bothered about volitility as I drip feed mostly. At the moment this is set to £1000 per month. I may lump sum at the end of the financial year if I have cash available.
In the 6 years until I "retire", I would actually LIKE my fund value to drop, because then I would be buying cheaper. Also there is some cushion to volatility because of auto-rebalancing of the Vanguard funds every year as mentioned already in the thread.
I am also dabbling a bit with peer-to-peer, with no more than 10% of my portfolio. It's just to gain experience now in case I decide to use it in my retirement years for a bit of extra monthly income. I want to see how it all holds together while I am working instead of semi-relying on it when I leave work.
You're welcome, always glad to impart some of my rather limited experience.
The fact that it's possible to achieve 10% is fantastic for me to hear, up until this point I've only ever been exposed to the ridiculously low bank rates, at the time of course, saving in a bank was necessary.
I'm thankful for the detailed answer and you seem to be in a comfortable position with a sound plan, I hope when I'm 49 I'll be in a similar situation.
I've decided to lump sum the £5,000.00 into a Hargreaves Lansdown S&S ISA, the VLS 100% of course, I hope to look back on this decision in decades time and can say to myself it was a good one, seems to be the less complicated option as I just want to fund and forget, as a supplement to my retirement, I've no desire to be filthy rich, I just don't want to be worrying about money in old age.
In future I will of course look into further investment opportunities, such as buying individual shares within a particular company, I find "Tesla" inspiring, but best for me at this time to actually get started and get some money working away, get a feel for it all.
I've also considered the possibility that the state pension won't exist anymore by the time I get to that age, though it would be nice to have as further supplementation. Is this likely?0 -
Why would you do that in future as individual shares are much more risky than 100% equities in a diversified VLS100. Maybe look at single sector funds in future to build up a portfolio but not individual shares in my opinion.In future I will of course look into further investment opportunities, such as buying individual shares within a particular company0 -
No, the us represent maybe 55% of the world equity market, if you invested according to economy size you'd have most of your money in government bonds.
However it's defined, having over 50% of your equity investments based in the US seems to me to be disproportionate. But others may think it's fine.
To be honest, I don't know ~exactly~ what my regional allocations are, but I currently use VLS60, L&G MI6 and HSBC Global Strategy Balanced in roughly equal proportions.
I won't pretend that the proportions are anything more accurate than rough approximations of what I feel is about right - because I've never felt that there is any point in being too precise about these things.0
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