Vanguard Life Strategy

brasso

takesyourchances wrote: »

The Smarter investing book is getting more in depth, I feel a brain rest coming on after a good read at it tonight.

It's a great book IMO, though that doesn't mean I follow the Hale approach very strictly. For me its value was to give me another perspective, particularly in terms of forcing me to 'have a word with myself' about my longer term aims and my risk appetite.

The problem with the book, which is actually a problem with me, is that it advocates an approach that is counter to that which many of us amateurs like most -- the cut and thrust, and the fantasy (which is all it will be for most) of making a killing by seeing something that others don't.

Of course, Tim Hale actually confronts those instincts head on, and uses the stats to tell me what an idiot I am.

In summary, what it's done is to create a mixed approach in me. I'm fortunate in having at least 4 separate portfolios in different accounts -- ISA, SIPP, and 2 standard share/fund accounts (plus a small dealing/savings account I have for my young niece). This means I can have the best of all worlds.

My SIPP, by far the largest account, follows Hale fairly loyally. Steady investments that I rarely touch, albeit ones that have done very well in the past year.

My ISA I use for value shares, while the main trading account I jointly have with my wife, I use to mix and match a bit but is mainly a high yield portfolio.

But if I had to follow just one strategy I would find it hard to argue against Hale.

takesyourchances

brasso wrote: »

It's a great book IMO, though that doesn't mean I follow the Hale approach very strictly. For me its value was to give me another perspective, particularly in terms of forcing me to 'have a word with myself' about my longer term aims and my risk appetite.

The problem with the book, which is actually a problem with me, is that it advocates an approach that is counter to that which many of us amateurs like most -- the cut and thrust, and the fantasy (which is all it will be for most) of making a killing by seeing something that others don't.

Of course, Tim Hale actually confronts those instincts head on, and uses the stats to tell me what an idiot I am.

In summary, what it's done is to create a mixed approach in me. I'm fortunate in having at least 4 separate portfolios in different accounts -- ISA, SIPP, and 2 standard share/fund accounts (plus a small dealing/savings account I have for my young niece). This means I can have the best of all worlds.

My SIPP, by far the largest account, follows Hale fairly loyally. Steady investments that I rarely touch, albeit ones that have done very well in the past year.

My ISA I use for value shares, while the main trading account I jointly have with my wife, I use to mix and match a bit but is mainly a high yield portfolio.

But if I had to follow just one strategy I would find it hard to argue against Hale.

It is a great book indeed, I am just over 200 pages in so just over half way, I would think it will get more in-depth from here on in. It is a great perspective and theory of Hales, I think there is a lot of mental dealings with investing as peoples instincts are to freak out or panic at losses or rough times and forget the long term which is damaging.

A certain low point or points in the market if you freaked out and sold etc could only be blimps over a long term period and I guess that is what we would all hope for.

I have enjoyed reading about the mental aspect in the book as I know there will be volatility and events that happen which is beyond our control so I think it is good to train your mind like this.

The 'have a word with myself' is very good indeed. Although it is early for me, I have been telling myself to invest every month, stay invested for as long as I can and think of any low points as a chance to be buying at lower prices through these periods. I liked the reference to Warren Buffet in the book about the guy who eats hamburgers all his life, does he want to be buying his hamburgers at the top rising prices all the time. Something a long these lines, which I liked

Also I am guilty of logging into my account regular, although this is mostly down to this being new I believe and also partly down to getting a structure in place. With the two extra funds I took out with the Lifestrat, I have settled much more as I feel there is a structure starting and understand why I choice them.

That is very good you have 4 separate portfolio's and can have the best of all that you want. I would maybe like to transfer my pension into an SIPP as well but I will give it a bit more time and thought.

The parts of the book showing tables for percentages for real returns for working out potential growth over periods of time I read them, but never worked them out. I may come back to them.

I didn't really want to be guessing any yearly growth in percentages and working out a possible amounts in X amount of years having invested so much per month etc. I don't feel comfortable predicting percentage returns or getting confident when seeing rises happening, I feel this is out of my control. Hope this makes sense, although it maybe is not correct in thinking.

While I hope in the long term for a good outcome and good growth returns or none of us would do this, I am thinking at the moment to invest as much as I can for as long as I can and to keep drip feeding no matter what and think of any low points as buying at lower prices and not to be looking to much when I don't need to be logging in.

I like the book very much so far and will read it right through, I don't want to be involved in individual stocks buying and selling so this suits, I just want to try and select the correct funds but not to many and keep drip feeding.

I think there is a lot of mental dealing to prepare yourself for long investing, I am sure others at more advanced stages than the likes of me went through all these understandings.

Best regards.

brasso

@takesyourchances

Obviously you're very enthusiastic and eager to learn -- fantastic.

Can I make a suggestion? And something that will give you a break from just reading?

Take a look at -- or rather, a listen to, the UK Motley Fool podcasts. Easiest way to get them is to subscribe via iTunes -- https://itunes.apple.com/podcast/money-talk-from-fool.co.uk/id123222682?mt=2

These free podcasts cover the whole gamut of investing strategy topics, and are aimed squarely at the novice or average investor. Even the ones going back a couple of years are fascinating and educational, even if (naturally) they sometimes deal with subjects that have moved on a bit. But once you've listened to a few of these, you'll have new insights and new ideas. Quite frankly, you will also hear plenty you might disagree with, but that is actually what is useful i.e. I am not just hearing stuff that feeds all my own prejudices, but contrary views that offer new perspectives.

And also, just to bring this back on topic, there are plenty of references to passive investing -- although the general focus is on active management albeit fairly slow and steady. It certainly isn't for active day traders.

And of course other podcasts are available! The FT ones + MorningStar are good.

And back to MF, the short US daily podcast is usually interesting -- https://itunes.apple.com/us/podcast/marketfoolery/id413551999, as well as their weekly round-up -- http://wiki.fool.com/Motley_Fool_Money_Radio_Show. These deal mainly with US markets but always entertaining.

latecomer

JohnRo wrote: »

The only thing I'm slightly uncomfortable with about anything below the 100% equity Lifestrategy funds is their UK bond allocation, aside from the issue of why anyone would want to buy UK government bonds right now

This is one thing thats also bugging me - everything I read says that bonds are in a bubble and hence only likely to go down in value so why go for anything other than the 100% at the moment?

Carpi09

latecomer wrote: »

This is one thing thats also bugging me - everything I read says that bonds are in a bubble and hence only likely to go down in value so why go for anything other than the 100% at the moment?

Most people who go for the VLS are in it for the long run. What's not to say they could well go down, but then could go up again? I've also heard the stories but some say they have a few more years in them yet.

latecomer

Thats very true but if something seems quite certain to drop then I cant get my head round selecting this rather than a flavour of VLS which excludes this.

But then this is probably why I've not invested yet. I hate losing/wasting money and despite knowing that the cash ISAs are going down in value , I cant quite make the leap to a S&S ISA. I hate being indecisive too...... :mad:

gadgetmind

latecomer wrote: »

Thats very true but if something seems quite certain to drop then I cant get my head round selecting this rather than a flavour of VLS which excludes this.

There are no certainties in this game and anyone who says otherwise is deluded. If I had 50%+ bonds in portfolios right now then I'd be a trifle worried but at 20% can sleep soundly.

I hate losing/wasting money and despite knowing that the cash ISAs are going down in value , I cant quite make the leap to a S&S ISA.

Simple approaches are usually best. Drip feed into something simple, diversified, and with low fees, and don't panic (or stop investing!) if/when values drop.

latecomer

gadgetmind wrote: »

Simple approaches are usually best. Drip feed into something simple, diversified, and with low fees, and don't panic (or stop investing!) if/when values drop.

I know this is what I should be doing - I just need to convince myself to actually do it.

One thing that I'm not so sure about it putting in a lump sum as I'm very tempted to move some of my cash ISAs over to a S&S ISA but then I lose the benefit of the averaging over time that you get with drip feeding.

gadgetmind

You can always leave the cash in the S&S ISA for a while, or invest it into a short-dated bond fund.

Carpi09

I have improved the opening post on this thread because it was lacking depth. Hopefully this will give new investors a better idea of what this thread is about. Any suggestions so I can add to it would be appreciated.:beer: