Vanguard Life Strategy

hyposmurf

I've currently got a over £16k of my pension being transfered into VLS 80.Transaction hasn't yet gone through, but ...I've just noticed the VLS 80 dilution levy wil drop from 0.17% to 0.1%!Should I should I hold off?When are these charges coming into effect?

bowlhead99

hyposmurf wrote: »

I've currently got a over £16k of my pension being transfered into VLS 80.Transaction hasn't yet gone through, but ...I've just noticed the VLS 80 dilution levy wil drop from 0.17% to 0.1%!Should I should I hold off?When are these charges coming into effect?

New rate effective from 1 July, according to their latest published factsheet for May which is on their site now.

The whole world market, to which VLS attempts to give you exposure, usually moves by significantly more than 0.07% up or down each day anyhow (a tenner at your level) so it would have been fruitless to stay in cash waiting for the fee to drop. And the sooner you are in, the sooner you start effectively 'earning' the dilution levies from all the other investors joining after you - all the money collected goes into the Fund rather than the manager's pocket.

I think I paid over 0.2% to get into VLS100 back in the day, didn't worry about it too much.

TCA

hyposmurf wrote: »

I've currently got a over £16k of my pension being transfered into VLS 80.Transaction hasn't yet gone through, but ...I've just noticed the VLS 80 dilution levy wil drop from 0.17% to 0.1%!Should I should I hold off?When are these charges coming into effect?

They're already in effect.

hyposmurf

Thanks for your help.Im with Bestinvest,their site lists 0.17%, is it just likely that they havent updated their site for the changes that took place on 1st July?


Edit:Update - I've contacted BI and the dilution levy is 0.1% now, so thats what I will be charged.

OXCART

I have read through this thread and i think i know my direction of travel. BUT i have come into 30K at aged 55 and about to semi retire. I am looking out to 5 -7 years when i MAY need the money. The questions:

Lump sum invest to max ISA allowance- or drip feed in monthly/each market dip to max allowance over the two financial years?

For each of the two strategies who would be the cheapest provider for charges?

Given my circumstances i am looking at LS 60 but appreciate thoughts and considering ETFs as safe gap filler if i do not go the full allowance?

Innovation

First off, I'm new to this so apologies if this is a stupid question but I'm looking at investing in one the VLSes (probably 80) and was wondering about worst case scenarios.

What does a bad year look like? -10%?
A really bad year? -20%?
A serious stock market crash? -50%?

I realise these are complicated questions so just looking for ballpark figures really. I'm guessing/hoping that because the fund is somewhat diversified by design that the figures shouldn't be too bad. And I realise this will likely be a long-term investment so will ride it out even if the return is poor initially, but I find knowing (rough) worst case scenarios can be useful for determining how much to invest.

Thanks.

masonic

Worst case scenario (using a portfolio of similar construction to VLS 80 and data from 1900-2008) would have been a peak to trough loss of around -60%. This would be a pretty rare event.

A "really bad year" (loss of -20% or more) would be expected, on average, less than once a decade and a "bad year" (loss of -10% or more) would occur a little less than once every five years.

JohnRo

The UK100 lost ~48% of the index value, briefly, during the 2008/9 crash. At the same time the S&P 500 lost ~55% of the index value, again briefly.

For the JPN225 (Nikkei) that number was ~60% and didn't recover until the counterfeit printing press was cranked up to eleven in early 2013.

So a similar, catastrophic market correction, might cost you upwards of 50% or so of the valuation, briefly. That's unlikely again but not impossible.

The problem is that if it does happen again then the experimental remedy used then, still needed, ongoing and unlikely to be removed any time soon, obviously won't have anything like the same effect ever again.

If that doesn't put you off nothing will

bowlhead99

Innovation wrote: »

First off, I'm new to this so apologies if this is a stupid question but I'm looking at investing in one the VLSes (probably 80) and was wondering about worst case scenarios.

What does a bad year look like? -10%?
A really bad year? -20%?
A serious stock market crash? -50%?

I'd probably not even go so far as to say that -10% is 'a bad year'. It's more of just 'a year'

I mean it's not ideal, but when you look back in time from 50 years in the future, the odd drop of 5,10,15% won't be particularly memorable.

What's important to remember is that just because Masonic's stats say a drop of x % only shows up once every x years, there's nothing to stop it happening in consecutive years. If you look at the FTSE100 for example, from December 1999 it dropped the next year, and the next year, and the next year. So it lost half its value but unlike the 2008 crash it was spread out over quite a long time period.

The graph below of FTSE100 is only capital values and ignores all the dividends earned, and it's only looking at one country's market , and it's only equities. While a VLS 80 has shares from more than one index which won't all move at the same time (although of course the main markets in the developed world are largely correlated with themselves) and it's only 80% equities so the bonds component should stop it moving so quickly between extremes. But still, you can get the idea that if the UK market is moving like this and the US and European markets are also moving in very similar directions at the same time, a high equities indexed portfolio can have some pretty unpredictable and large swings. So you're right to be mentally prepared for those scenarios.

If you're not planning on using the cash for 30 years they probably don't matter. But you can't necessarily say the markets will behave between 2010-2100 just like they did in 1900-2010. That's why you see the old cliche 'past performance is no indication of future results' bandied about everywhere.

takesyourchances

Just a bit of an update on how I am getting on, my set up is still the same and I am drip feeding still every month.

A couple of goal's reached now, I have now hit 15K invested in my S&S ISA which I am pleased with just over and year and a half in, my next goal is to reach 20K invested in my S&S ISA.

My holdings are still the same, except my core VLS is now getting more towards target level and is at present 65% and I will continue to raise this towards 70% holding and the rest evenly split.

I feel content with my funds and VLS so I am drip feeding every month and not thinking about market noise or changing anything, just putting away monthly.

VLS 60% - Now reached 65% core, aim to raise towards 70% now.
Standard Life Global Smaller Companies
Marlborough Multi Cap
First State Asia Pacific Leaders
First State Global Emerging Markets
Aberdeen Global Asian Smaller Companies
Aberdeen Japanese Smaller

Hope everyone else is doing ok and any thoughts as always is appreciated.

Thanks!