Vanguard Life Strategy

masonic

adindas wrote: »

If you are still renting, have your own house should be your first priority. Everyone rational will be arriving at the same conclusion no brainer. I do not think anyone here will advise you otherwise and

It really depends on your circumstances. I don't own my own home and I don't think buying a home should be my first priority.

adindas

masonic wrote: »

It really depends on your circumstances. I don't own my own home and I don't think buying a home should be my first priority.

Well, my assumtion here is based on rational that,
- People are still renting so s/he will be ocupying the house s/he has bought,
- Buy the house on the right time with the right price, thus to avoid the negative equity.
- S.he has enough deposit so will not pay the interest well over the odd ,

If people is renting say £X and then pay mortgage of about £X monthly, I think most people will be arriving at the same conclusion and they do not need financial advisor in this obvious case.

masonic

You seem to have added several new assumptions, so I'll simply acknowledge your agreement that it does depend on your circumstances and is not such a no brainer for everyone who is renting.

Other assumptions you might want to add in order to refine your model:
- You are planning to still live and work in the area in a few years time
- You are able to to find property of comparable quality and location for sale at a reasonable price

Zola.

£300 drip fed into LS 80 today.

Dird

How does the VLS 100% compare to a global index tracker? Is it not the same but with higher costs?

Rollinghome

masonic wrote: »

You seem to have added several new assumptions, so I'll simply acknowledge your agreement that it does depend on your circumstances and is not such a no brainer for everyone who is renting.

Other assumptions you might want to add in order to refine your model:
- You are planning to still live and work in the area in a few years time
- You are able to to find property of comparable quality and location for sale at a reasonable price

I would also tend, perhaps wrongly, to think of prioritising the of buying a home as a "no brainer" without giving it much thought simply because it worked so well for me and I expect others think similarly so for the same reason. I was able to repay my 30 year mortgage within five years and retire very early safe in the knowledge that unless I sold up I would always have a home or, if necessary a valuable asset. Being rent and mortgage free, I was able to then build up what most people would consider a very sizeable sum in investments.

Of your two points, the first I'd fully agree with to the extent that some calculation needs to be done on the cost and inflexibility of moving if required.

On the second I'm less sure. As a result of buying early, I have a house in the area of my choice which, had I chosen to rent instead, would probably be unable to either buy or rent now. So I would suggest that even if you can't buy the perfect home in an ideal location now, it might still be worth compromising in the short term to avoid being in a still worse position in the longer term.

Life is always a matter of calculations, choices, and gambles, so good luck to everyone having to make those choices.

Zola.

Rollinghome wrote: »

I would also tend, perhaps wrongly, to think of prioritising the of buying a home as a "no brainer" without giving it much thought simply because it worked so well for me and I expect others think similarly so for the same reason. I was able to repay my 30 year mortgage within five years and retire very early safe in the knowledge that unless I sold up I would always have a home or, if necessary a valuable asset. Being rent and mortgage free, I was able to then build up what most people would consider a very sizeable sum in investments.

Of your two points, the first I'd fully agree with to the extent that some calculation needs to be done on the cost and inflexibility of moving if required.

On the second I'm less sure. As a result of buying early, I have a house in the area of my choice which, had I chosen to rent instead, would probably be unable to either buy or rent now. So I would suggest that even if you can't buy the perfect home in an ideal location now, it might still be worth compromising in the short term to avoid being in a still worse position in the longer term.

Life is always a matter of calculations, choices, and gambles, so good luck to everyone having to make those choices.

How on earth did you turn a 30 year mortgage into a 5 year one?

Congrats on that

adindas

Zola. wrote: »

How on earth did you turn a 30 year mortgage into a 5 year one?

Congrats on that

If your mortgage balance is already very low £50,000- (say), why not ? Few people have this amount of money or even more sitting in instant access current account. For this people they could even clear their mortgage immediately.

But it is not a sensible decision if your current mortgage interest is very low (say less than 2%), while this money could earn higher interest somewhere else say 3%+ instant access, risk free. Let alone penalty for over payment above penalty free threshold.

Rollinghome

Zola. wrote: »

How on earth did you turn a 30 year mortgage into a 5 year one?

Congrats on that

It was quite a while ago. Bought when house prices were subdued using a then scarily large mortgage and when I had the opportunity (and energy) to earn a lot of money worked day and night to clear it. I knew I wouldn't earn that sort of money forever. As often the case, a combination of hard work and good luck.

TheTracker

Dird wrote: »

How does the VLS 100% compare to a global index tracker? Is it not the same but with higher costs?

A global tracker is cap weighted. You could hold, say VWRL, for 0.22-0.25% versus the 0.24% for VLS100. Or you could divide your portfolio into whatever had the lowest charges, such as a UK All share tracker at about 0.06%, a Dev world ex-UK tracker at 0.15% and Emerging Markets at 0.20%, while maintaining cap weights and essentially replicating VWRL. But in doing this you may attract trading fees that negate any ongoing charge savings, and perhaps more importantly, you'll need to pay trading costs to rebalance and suffer any return impact of only periodically rebalancing rather than daily.

But most people don't want a straight world tracker. They want to 'tilt' towards various classes. Research has shown a long historical trend toward better returns for the risk on small value stocks, and a significant diversification factor for holding property, and some benefit in holding a higher % of EM than the cap weighting would otherwise suggest. And many people harbour a 'home bias' where they like to keep more in their developed home market than that market is represented by in the global market. You can construct your own portfolio of say 3-6 index funds for this at less than 0.2%

VLS and its competing products try to navigate these issues with creating offers that most appeal to get assets under management. VLS has a home bias, and its asset allocations are built on internal research that differs from pure cap weighting. It creates enough differentiation to allow vanguard to sell a 'product' while not deviating too far from its pure passive roots.

Personally, I don't use VLS because I want to be in control of the asset allocations and the price of VLS isn't low enough for me to trade that control (it's actually more expensive). But I'm happy calculating my rebalances, confident in staying to my asset allocation decisions short/medium term, and staying on top of any long term changes that might mean the allocation needs change medium/long term. Many people aren't comfortable there, and a product like VLS may be appropriate. Others may want to keep everything ultra simple with VWRL accepting the simplicity comes at the cost of potential black swan convulsions and lack of potential asset tilts.