Vanguard Life Strategy

simonfitba

You'd hope to get 4% over the long term. So that's the figure I'd plug in.

bowlhead99

Zola. wrote: »

Obviously no one can predict the future and there will be all sorts of peaks and falls, but do you think over 20 years it would be fair to expect an average of 5% a year interest / growth? Is that unrealistic, or too conservative?

I am just playing around with a compound calculator and trying to work out what I would need to be putting in every month to hit my long term target.

It depends on things that aren't within our control. Going off the long term average returns from such a portfolio over decades and decades, something like 4-5% on top of inflation year after year would be about right as a rule of thumb for an equities-heavy portfolio.

Over the next 20 I would plan conservatively and say it may be less than that.

There are not many people running around saying equities or debt are particularly cheap; while simplistically, the average or above average returns are perhaps most easily obtained from average or below average purchase prices. Of course, if you are starting a regular investing plan rather than investing a big lump today, most of your money is not invested today, but in the future. And in the future, all things being equal, assets should have an average buy price and an average sell price and get an average return.

As nobody knows what a fair average return is other than by historic data, you can only really look to the past for cues. But it still doesn't help your future self if you assume you'll get the average return for the last 50 or 100 years off an investment you make over only the next 20 (especially as most of your money is not invested a full 20 anyway, but just 15, 10, 5 or less because you are dripping it in. As such it makes sense to be conservative in any estimates, to reduce the risk of it not meeting your objectives.

So instead of saying 5% *on top of* inflation, maybe compromise for the purpose of estimating at somewhere between that, and 5% *including* inflation. I don't know whether your "5%" number in your original suggestion was meant as the former or the latter.

Snakey

LS 60 is about to plummet, guys, because I finally got off the pot and sunk all my ISA money into it today.

BLB53

VLS60 update on diy investor today
http://diyinvestoruk.blogspot.co.uk/2016/05/vanguard-lifestrategy-year-1-update.html

gadgetmind

bowlhead99 wrote: »

There are not many people running around saying equities or debt are particularly cheap

True, but when they are cheap, people will explain that they are cheap because they are risky. On the other hand, when they are expensive, people say they are risky because they are expensive.

coonra987

I'm keen to start passive investing via a SIPP (drip feeding) and think these would really suit me (I'm a medical student and I won't have much time to be reading the financial times). Sorry if these basic questions have been addressed earlier.

Who are the main brokers/platforms to buy these from? I've read to keep costs as low as possible, so how are others doing this?

How easy is it to change platforms (e.g. If the one I choose raises its fees significantly in a few years)? Do I get penalised for doing so?

I am 29 years old. So based on the 100-age rule, I'd want 70:30 ratio. Do people split between two funds, or is that more trouble (and costly) than it's worth? If so I'll have to make a decision between using LS80 vs LS60.

Thanks in advance

george4064

camspence987 wrote: »

I'm keen to start passive investing via a SIPP (drip feeding) and think these would really suit me (I'm a medical student and I won't have much time to be reading the financial times). Sorry if these basic questions have been addressed earlier.

1.Who are the main brokers/platforms to buy these from? I've read to keep costs as low as possible, so how are others doing this?

2. How easy is it to change platforms (e.g. If the one I choose raises its fees significantly in a few years)? Do I get penalised for doing so?

3. I am 29 years old. So based on the 100-age rule, I'd want 70:30 ratio. Do people split between two funds, or is that more trouble (and costly) than it's worth? If so I'll have to make a decision between using LS80 vs LS60.

Thanks in advance

1. http://monevator.com/compare-uk-cheapest-online-brokers/

2. You can transfer between brokers, but there will be exit costs (some brokers charge more than others). You can check on their wbesites or contact them to check what their exit/transfer out fees are.

Also, I have heard that when a broker significantly raises its platform fees, it waives its exit/transfer out fees for current clients for a limited period.

3. Typical investors in the LifeStrategy range tend to just invest in the LifeStrategy fund itself, some do add some additional funds in the side to add some 'spice' to their portfolio. The only notable omission from the Lifestrategy funds is exposure to Property, so some investors hold a property fund alongside their core LifeStrategy holding.

At your age I would go for the LS80 if I were you. (This should not be construed as financial advice).

Good luck

dunstonh

How easy is it to change platforms (e.g. If the one I choose raises its fees significantly in a few years)? Do I get penalised for doing so?

Some platforms have exit charges. Some don't.

I am 29 years old. So based on the 100-age rule, I'd want 70:30 ratio. Do people split between two funds, or is that more trouble (and costly) than it's worth? If so I'll have to make a decision between using LS80 vs LS60.

Creating some arbitary rule is not good enough. Sure, the longer the timescale, the more the risk is diluted. However, you also have to think about your capacity for loss and your behaviour when a loss occurs. Can you handle your statement showing a drop of 35% from the previous 6 months. i.e. £100k down to £65k (when the value gets higher that is).

Do people split between two funds, or is that more trouble (and costly) than it's worth?

Cost is not an issue with mono charged funds. (two funds charging x% p.a. is the same as one fund charging x% p.a.). However, logic needs to come into play along with objectives. The VLS funds are really aimed to be single held or held with other multi-asset funds with a different strategy. i.e. you could hold VLS60 for your active passive multi-asset strategy and Inv Perp Distribution for a different strategy (income focus). Both funds have the same risk but both have different objectives. At times, one will be better than the other. So, having both and rebalancing is just one potential way of doing things. That is just an example. However, if you plan to be a lazy investor, then you should stick with multi-asset only and probably just one fund.

If so I'll have to make a decision between using LS80 vs LS60.

Easy decision to make as the risk profile of those two funds is very different.

coonra987

george4064 wrote: »

1. Link - compare the UK's cheapest online brokers

2. You can transfer between brokers, but there will be exit costs (some brokers charge more than others). You can check on their wbesites or contact them to check what their exit/transfer out fees are.

Also, I have heard that when a broker significantly raises its platform fees, it waives its exit/transfer out fees for current clients for a limited period.

3. Typical investors in the LifeStrategy range tend to just invest in the LifeStrategy fund itself, some do add some additional funds in the side to add some 'spice' to their portfolio. The only notable omission from the Lifestrategy funds is exposure to Property, so some investors hold a property fund alongside their core LifeStrategy holding.

At your age I would go for the LS80 if I were you. (This should not be construed as financial advice).

Good luck

1. Thanks for pointing this out, I was probably not far from stumbling across it, but it's hard to see through the sea of information facing the unseasoned investor! This is exactly what I was looking for.

2. Thank you, I'm seeing £10-15 per holding coming up. What does per holding mean? Does that mean if I've bought, say, 3 different indexes, I'd get charged for each one?

3. Seeing that I want this to be a pension fund, I think I can tolerate a good deal of risk now to help get it moving (and if there were a crash in the next few years, I wouldn't have a significant amount of wealth to lose). Perhaps once I've reached a significant level of wealth, I could then move it to an LS60.

dunstonh wrote: »

Some platforms have exit charges. Some don't.

Creating some arbitary rule is not good enough. Sure, the longer the timescale, the more the risk is diluted. However, you also have to think about your capacity for loss and your behaviour when a loss occurs. Can you handle your statement showing a drop of 35% from the previous 6 months. i.e. £100k down to £65k (when the value gets higher that is).

Cost is not an issue with mono charged funds. (two funds charging x% p.a. is the same as one fund charging x% p.a.). However, logic needs to come into play along with objectives. The VLS funds are really aimed to be single held or held with other multi-asset funds with a different strategy. i.e. you could hold VLS60 for your active passive multi-asset strategy and Inv Perp Distribution for a different strategy (income focus). Both funds have the same risk but both have different objectives. At times, one will be better than the other. So, having both and rebalancing is just one potential way of doing things. That is just an example. However, if you plan to be a lazy investor, then you should stick with multi-asset only and probably just one fund.

Easy decision to make as the risk profile of those two funds is very different.

Thank you. I'm certainly apprehensive about how I might react to a 35% drop, I guess you'll never really know yourself until you're there in the thick of battle. I've seen it written that a passive investor shouldn't really be checking their stocks often (to avoid the emotional turmoil and overthinking).

A 35% loss initially wouldn't concern me as it wouldn't take too long for me to earn a similar amount from my employment. But like you say, if I were fortunate enough to have £100,000 in there one day, I should be loathe to lose it and would certainly have a greater reaction, so perhaps I ought to have a self-imposed monetary limit (e.g. £75,000) whereby I should then make my portfolio more defensive by moving it to LS60.

george4064

camspence987 wrote: »

1. Thanks for pointing this out, I was probably not far from stumbling across it, but it's hard to see through the sea of information facing the unseasoned investor! This is exactly what I was looking for.

2. Thank you, I'm seeing £10-15 per holding coming up. What does per holding mean? Does that mean if I've bought, say, 3 different indexes, I'd get charged for each one?

3. Seeing that I want this to be a pension fund, I think I can tolerate a good deal of risk now to help get it moving (and if there were a crash in the next few years, I wouldn't have a significant amount of wealth to lose). Perhaps once I've reached a significant level of wealth, I could then move it to an LS60.

2. It means what it means, per holding. Vanguard LifeStrategy 80% is 1 holding, beneath it there are hundreds and thousands of underlying holdings. But in terms of your portfolio, you have a holding of X units in the Vanguard LifeStrategy 80% fund.

If for example, you held the LS 80% fund, a separate property fund and a specialist UK small cap fund. You would have 3 holdings, so charged for transferring 3 holdings out.

3. That is up to you.