Vanguard Life Strategy

takesyourchances

Any thoughts here, maybe I am over thinking here tonight, which is highly possible!

Should I stick to the Vanguard 60% Equity fund being reinvested and focus towards filling as much as I can of my yearly S&S ISA allowance into solely this fund (I will fill my cash ISA allowance also in April) or should I add maybe another tracker fund to the S&S ISA and divide a drip feed of £200 per month into 2 funds (£100 each) and open a second fund with a smaller lump sum?

If a second fund is a sensible idea any recommendations, is the FTSE 100 an idea or something else? (low fee like the Vanguard 60%) or stick to the Vanguard 60% Equity Fund in the S&S ISA?

Last question is there any recommended books to read? after reading monevator a lot over the past week I like the articles written by The Accumulator and passive investing rather than picking individual stocks and this style of adding funds and leaving suits me best.

Thanks for any input.

Best regards.

Eponym

takesyourchances wrote: »

Any thoughts here, maybe I am over thinking here tonight, which is highly possible!

Should I stick to the Vanguard 60% Equity fund being reinvested and focus towards filling as much as I can of my yearly S&S ISA allowance into solely this fund (I will fill my cash ISA allowance also in April) or should I add maybe another tracker fund to the S&S ISA and divide a drip feed of £200 per month into 2 funds (£100 each) and open a second fund with a smaller lump sum?

If a second fund is a sensible idea any recommendations, is the FTSE 100 an idea or something else? (low fee like the Vanguard 60%) or stick to the Vanguard 60% Equity Fund in the S&S ISA?

Last question is there any recommended books to read? after reading monevator a lot over the past week I like the articles written by The Accumulator and passive investing rather than picking individual stocks and this style of adding funds and leaving suits me best.

Thanks for any input.

Best regards.

The LifeStrategy already covers the FTSE 100 so there's no need to add further exposure to that, unless it's part of your strategy.

takesyourchances

Eponym wrote: »

The LifeStrategy already covers the FTSE 100 so there's no need to add further exposure to that, unless it's part of your strategy.

Thank you Eponym for that. that the FTSC 100 is already covered, I will concentrate on the LifeStrategy getting that build up as all seems to be pretty covered

Best regards.

bowlhead99

The Vanguard lifestrategy funds are quite a cheap and conveniently decent all-in one product IMHO although I only use the 100% equity version at the moment as I'm just as happy with cash as government bonds at current prices. As to whether you need another fund alongside, I would say yes, a wider spread of assets is usually better, most agree that diversification is a good thing when you can't know where the market is going next.

If you do have some strong opinions where the market is going you might like to focus on those areas, otherwise just diversify into un correlated funds. Of course your take on the market might be that the perfect areas for growth are 60% international large-cap stocks and 40% in UK government or UK investment grade corporate bonds. In that case buy more Vanguard lifestrat 60. I don't agree personally.

Given a third of your vanguard fund is already in UK equities, weighted towards the largest companies in the index, I agree with Eponym -don't see any benefit in adding a FTSE 100 tracker on the side. This just concentrates the risk further rather than spreading you out into other areas. If you must have another equities tracker because trackers are your thing, at least consider a global smallcap fund (vanguard do one, or there are plenty of etfs) for more locally-focussed companies with perhaps more growth prospects rather than just mega multinationals you already have. If you are keen on the UK there's always a FTSE 250 tracker rather than the 100 for example.

Personally I would branch out into other areas. Rather than getting more government bond-bubble bonds, perhaps some higher yielding corporate bonds or some real estate, absolute return funds or whatever. For equities, rather than getting more indexes of largecap equities in mostly developed markets consider smaller companies or perhaps funds which are actively managed in less developed or frontier markets, or even a specific market sector (tech, minerals/mining/metals, commodities plays etc). There will be options to suit your risk profile and the world is not just largecap global equities vs gilts and investment grade bonds. Those are just easy extremes to explain to novices.

Trackers are cheap to run but of course ultimately with your small amounts the odd fractions of a percent of fees are not going to make many pounds of difference. Largely irrelevant compared to the market swings from being in the right place or wrong place at a time. Actually a 5% return or 10% loss is not thousands of pounds swing when you're only playing with 2-3k anyway. Just keep dripping in to the funds you like and treat it as a learning experience for when you do have thouands.

In terms of books you'd like, Tim Hale's Smarter Investing is well regarded among passive investment fans on here, he has some very sensible things to say though to my mind he is a bit over the top on his evangelical "passive investing is clearly the best". Also well reviewed is something like FT Guide to Exchange Traded Funds and Index Funds: How to Use Tracker Funds in Your Investment Portfolio . The version linked only has one review but the older edition had 10+ good reviews and no bad ones.

takesyourchances

Thank you for taking the time to reply in detail and also for recommending those books, I will have a look at ordering the Tim Hale's Smarter Investing and read through it. The passive investing at the moment suits me as I am learning and started now and this is new to me but I really want to learn more as I want to build up my S&S ISA investment.

Thank you for your input regarding the Vanguard 60% equity fund, after reading these posts today I now understand that adding a FTSE 100 tracker on the side is adding to the risk with already a third of the Vanguard 60% fund focusing on the UK including the FTSE100 ready.

The FTSE 250 is an option, but after reading the replies I think this is maybe to much focus on the UK along with the Vanguard fund and global diversification is maybe a better approach.

At the moment with trackers I am starting to understand, also with novice knowledge I can leave them and not need to interfere.

So it seems that a tracker on the side along with the vanguard 60% is a good idea if I am understanding correct, I also realise at the moment 2-3K is not a massive amount of money and I don't want to overload with lots of trackers with smaller amounts.

If I am correct two funds then allows me time to build the money invested up and add a little diversification in with the Vanguard 60% Lifestrat. With the Vangauard 60% lifestrat covering large largecap, the diversification could then come from the suggested global smallcap tracker, so this would give some diverse to smaller global companies along with the Vanguard holdings of largercaps.

My S&S ISA is with HL, I checked today after reading the reply but could not find a Vanguard Global Smallcap fund on their site, maybe I have not seen it by the correct name or would there be a similar tracker on the HL site that would be suitable and cover this if it is not available there?

If I am along the right lines here, I could open a second fund with say with a lump sum of £500 to start me and allocate some of my next drip feed which will be £200 in March, I was thinking I could either go 50% of the drip feed into 2 funds or allocate £125 to the Vanguard 60% and £75 to a side fund per month. I guess this can be changed month to month as well and I may well increase the overall drip feed down the line as well.

I also have around £2500 coming from a 5 year bond in October which at the moment I think I will reinvest all into my S&S ISA to the Vanguard 60% Lifestrat and to another fund if I take out a second and this will boost the overall investment up a little in the S&S ISA.

Looking ahead (maybe looking a bit far ahead on my limited knowledge and one step at a time ) would this be correct in saying this would be plenty to be getting on with now and maybe build towards 10K invested and then maybe look then at a further diverse fund for the portfolio, maybe an investment and part drip feed into say an Asia and Pacific fund? ...maybe with the manufacturing and rise of Asia this could be another approach after I would reach say 10K invested?

Thank you again for the detailed reply and for all input and I hope that I am going in the right direction so far at these early stages?

I will look at buying the Smarter Investing book and start learning more Thank you.

Best regards.

Newbie2saving

Useful to see the actual allocation you have chosen;

Allocation to underlying Vanguard LS 60% fund;
Vanguard FTSE Developed World ex-U.K. Equity Index Fund 33.9%
Vanguard FTSE U.K. Equity Index Fund 21.0%
Vanguard U.K. Government Bond Index Fund 18.8%
Vanguard U.K. Investment Grade Bond Index Fund 12.6%
Vanguard U.K. Inflation-Linked Gilt Index Fund 8.7%
Vanguard Emerging Markets Stock Index Fund 5.0%
Total 100.0%

Highlights what you are investing in, and importantly what is missing.

Can recommend Tim Hale's book, I have it, but make your own choices. I initially invested in active funds, was (and still am) very new to investing and then when HL offered the VG LS funds, it was exactly what I was after, cashed in my existing HSBC FTSE tracker and bought this in it's place. Remember HL charges a fee for every VG / HSBC tracker, so you may want to bear this in mind. Monevator compared fund 'supermarkets' on a cost basis and depending on how many you have, depended on which was the cheapest.

takesyourchances

Newbie2saving wrote: »

Useful to see the actual allocation you have chosen;

Allocation to underlying Vanguard LS 60% fund;
Vanguard FTSE Developed World ex-U.K. Equity Index Fund 33.9%
Vanguard FTSE U.K. Equity Index Fund 21.0%
Vanguard U.K. Government Bond Index Fund 18.8%
Vanguard U.K. Investment Grade Bond Index Fund 12.6%
Vanguard U.K. Inflation-Linked Gilt Index Fund 8.7%
Vanguard Emerging Markets Stock Index Fund 5.0%
Total 100.0%

Highlights what you are investing in, and importantly what is missing.

Can recommend Tim Hale's book, I have it, but make your own choices. I initially invested in active funds, was (and still am) very new to investing and then when HL offered the VG LS funds, it was exactly what I was after, cashed in my existing HSBC FTSE tracker and bought this in it's place. Remember HL charges a fee for every VG / HSBC tracker, so you may want to bear this in mind. Monevator compared fund 'supermarkets' on a cost basis and depending on how many you have, depended on which was the cheapest.

Thanks for showing me the breakdown, I read over that before I took it out but good to be reminded of it as I have been reading so much information on investing lately the head becomes clouded

Very handy to see what the Vanguard 60% is going into and what is also missing, this is the part that I really do not know very well and got me thinking on a side fund.

Yes that is another factor to take into consideration fees for extra funds.

I am happy with the choice of the Vanguard 60% as it is quite a mixed spread all in one fund, I can drip feed away in it and leave the option open of a second fund, if one was suitable, the main thing I am happy with recently is taking the decision to start the Vanguard 60% and getting started into the S&S ISA

I wouldn't want to pick the wrong mix or allocation when having the Vanguard fund already investing in certain areas and adding more risk, for example like it was pointed out about the FTSE 100 today, I know I have a lot of learning to do regarding all of this and the information here has been very helpful from everyone.

That is good you can recommended also Tim Hale's book and interesting that you changed your HSBC FTSE Tracker to the Vanguard Life Strat, is this the only tracker you now hold?

Best regards.

Eponym

I believe most (all?) of the funds HL offers require at least a £1000 lump sum for new fund purchases (£250 to top up an existing fund with a lump sum), so if you want to buy a new fund with £500 you would have to set it up as a monthly payment of, say £250, let it run for 2 months, then cancel it.

ColdIron

You can switch £250 from an existing fund to a new one, so top up one of your funds with £500 and switch it to your new fund of choice

grey_gym_sock

takesyourchances wrote: »

My S&S ISA is with HL, I checked today after reading the reply but could not find a Vanguard Global Smallcap fund on their site, maybe I have not seen it by the correct name or would there be a similar tracker on the HL site that would be suitable and cover this if it is not available there?

no, i don't think HL have it. the vanguard range of funds (intended for UK investors) is partly UK-domiciled and partly irish-domiciled. and HL only have the UK funds available.

dunno about alternatives.