Vanguard Life Strategy

blizeH

I've got the 'Accumulation' option - is that the wrong one?

Perelandra

blizeH wrote: »

I've got the 'Accumulation' option - is that the wrong one?

I imagine you're trying to build up the amount you have invested in your ISA? If so, that one is simpler than the Income version (it grows in value, without you needing to decide on what to do with the income).

Perelandra

Glen_Clark wrote: »

Is that more tax efficient than taking it as a capital gain?

I think they're actually identical for tax purposes- if you have the ACC version, you get taxed on effective dividends, so the income/capital gain ends up being the same in both "flavours" of the fund.

ozzage

nxdmsandkaskdjaqd wrote: »

I didn't follow this thread until quite late, but did skim through previous posts. My question is: Would this type of fund be right for a passive investor, who as they approach retirement, could move there funds into the low risk funds? So if you were 50 years old purchase the 80% fund, then at 55 move to the 60% fund, then at 60 use the 40% fund. Is that right?

It's difficult to say whether it's suitable for you without knowing your full circumstances, but theoretically yes in my view it's very well suited to doing that (manual "life-styling")

vickssinex

nxdmsandkaskdjaqd wrote: »

I didn't follow this thread until quite late, but did skim through previous posts. My question is: Would this type of fund be right for a passive investor, who as they approach retirement, could move there funds into the low risk funds? So if you were 50 years old purchase the 80% fund, then at 55 move to the 60% fund, then at 60 use the 40% fund. Is that right?

Yes, the Monevator site has an article on this very topic: http://monevator.com/lifestyle-vanguard-lifestrategy-funds/

Cheers

Glen_Clark

bowlhead99 wrote: »

I'm just as happy with cash as government bonds at current prices.

Sure, but do they only have government bonds in the fund?

badger09

Background:
Female, early 60s
Index linked pension (occupational & state) sufficient for day to day needs including modest holidays
No debts
No dependants
No major spending needs/plans
Substantial cash savings, of which only a small portion, even at best available rates, is keeping up with inflation

I’ve been doing lots of reading, Tim Hale, Monevator, etc and am becoming paralysed by analysis. To try to preserve the value of some of my savings, I’ve decided to invest this year’s remaining ISA allowance £5640 in a Vanguard Life Strategy Fund via Hargreaves Lansdown (Vantage ISA account open and partly funded) and to continue to invest next year.

My problem is that I don’t really fit the model of the ‘typical’ investor using these funds. I’m coming to this rather late in my life, but as I’m investing only a small proportion of my savings I think I could be more adventurous. I’m considering the 60% and 80% VLS.

I already have around £9k in a FTSE 100 tracker so there would be some duplication unless I take some action on this.

I would welcome any thoughts, comments, warnings etc

jamesd

A global developed market tracker fund has between 50% and 60% invested in the United States, where markets are currently around record highs. Mixed asset global funds like LifeStrategy have that much in their equity portion. Buy low, sell high is general advice.

For this reason it's not currently a great idea to put lots of new money into global trackers without doing something to reduce the US component and portion that is being bought at a high price.

There are plenty of other markets that are not at highs. Emerging markets haven't grown so much this year, the far east also has lots of potential and Europe will grow eventually.

Mixed assets funds can be useful as core holdings but do try to work out when it's the best time to be favouring them and when it may be better to favour other areas for a while, perhaps shifting later.

Don't let this prevent you from getting started, though - the LifeStrategy fund beats not investing.

Assuming you're in normal good health you can usefully know that around half of women aged 65 live to 88 or older so you have a good long investment horizon ahead of you.

Is the total value of the income from your occupational and state pensions over £20,000? If so you might find it useful to read up on Flexible Drawdown, which lets you take all of the money out of a personal pension pot. That can make personal pension use a great deal because it removes the lock up aspect.

badger09

Thanks jamesd

Sounds like I need to look more closely at the precise makeup of each component in these 'Lifestyle' funds. Oh dear - more analysis

Re the pensions - Flexible Drawdown is not applicable as it is a Public Sector pension.

brasso

Instead of buying a big chunk of VLS once a year, you would probably be better off spreading your purchases over the year to achieve a 'pound cost averaging' effect.

As for doing more analysis, well, JamesD makes some good points though I was under the impression that the UK comprised the biggest component of the fund. To be honest, for 5K or so, I wouldn't agonise too much. Make a decision and do it. If you want to invest all at once, perhaps 50% in VLS and 50% in a decent emerging markets fund. I have VLS80 myself but am a bit disappointed that there isn't more emerging markets in what is supposed to be a global tracker.