Is Vanguard LS the right choice for me?

WoB

I have been doing a bit of research which initially stemmed from answers to a question I posed on the Pensions forum. Myself and my wife have used £5k each of the 2013/14 ISA allowance in Cash ISA's. I am looking to use the remaining 2013/14 allowance into S&S ISA's. From April and the new allowance I am planning on paying in £500 per month each into a S&S ISA. We have previously maxed our cash ISA's for the previous few years, so I don't think we will be putting anything into cash next years given the amounts we have available, our cash reserve and the poor interest rates.

I am looking at the S&S ISA as 5-10 year investment, depending on performance. I'm looking at the Vanguard LS products and thinking of the 60/40 split.

Does this seem reasonable? I'm 45 and happy to see how it goes over a 10 year period. My wife is 50 and again we are looking at 10 years for hers, perhaps we could go lower risk for hers? I would be personally happy to go 80/20 even as I'm not advers to higher risk.

What is best platform for lowest costs/flexibility for this product?

With regards to pensions, I am also looking at perhaps the same product? I assume the product is also suitable as pension vehicle? Is it advisable to have the same product in both a pension and ISA? Again, I assume not an issue given the product is index based?

Would appreciate thoughts on the suitability of the product itself + the plan to put a lump sum in before the end of this financial year and the ongoing monthly amounts next year. What is the cheapest way of taking out this product (platform?) for both pension/ISA perspective.

kidmugsy

I like the idea of diversification so that if my wife had a Vanguard LS fund in her ISA (say) I'd have (say) an HSBC fund or ETF in my SIPP and an L&G fund in my ISA. I'm assuming that differences in charges and tracking errors would be trivial.

Then if one firm becomes damaged by, say, computer meltdown or massive fraud, I've still got money in an unaffected firm.

Not everyone will agree; to each his own.

ColdIron

Are you or your wife employed? If so you may want to take advantage of your employers contributions towards their pension scheme

yatinsardana

If you want to dip your toes in investment, I think something like VLS is ideal for you. It gives you instant diversification. My personal opinion is that although VLS may be sufficient for both of you:

1) I agree with kidmugsy that perhaps try and diversify your diversified funds and go for different trackers in different accounts. Although VLS gives you good diversification, you should remember that you've put all your eggs in one basket (ie vanguard)

2) this is not so much for your wife as it is for you: if you're willing to take higher risk, maybe you can add one or two more passive funds into your portfolio. Something like emerging markets or small caps - I know VLS includes them in the portfolio but I think there's no harm in going 80% of your portfolio towards VLS and 20% towards sectors that give you a bit more risk according to your appetite.
You don't have to do it right now - you could start with VLS and then a year or so add another fund. I know some may counter my suggestion with the idea that the whole point of VLS is to give you a portfolio that suits your risk appetite.

Overall, your idea sounds good to me. I'd just back kidmugsy with what he said

WoB

Cheers for responses so far. Sounds like the idea is fine but the advice is to spread the risk, which is fair enough. Any thoughts on cheapest way to invest into the Vanguard LS products. I guess the same advice also applied to taking out a new pension - avoid the same companies?

bownyboy

I did the same as you. Realised I should look further than cash ISAs paying dismal rates, but as a passive investor I didn't want to spend hours pouring over the details.

I chose VLS 60/40 and pay set amount in every month. I log on once a month to check the value and update my net worth spreadsheet and thats it.

No point in getting hung up on ups and downs as its a long term thing (10 years + for me)

I might take the advice here and open another account with a different tracker fund though.

WoB

What I have realised is that as I will 'only' be putting in 6k into next years ISA (and with the recent budget changes) there is no real rush to try and use up the 6.5k spare for this years. I guess of course circumstances could change but I think I'll hold off on trying rush something through by 5th April and instead double next years contributions to 1k a month each, so still 3k under the new limit.

Out of interest bownyboy, which platform did you use for investing in Vanguard?

ColdIron

WoB wrote: »

Any thoughts on cheapest way to invest into the Vanguard LS products

For sums less than £32,000 Charles Stanley Direct are hard to beat, see

http://www.comparefundplatforms.com/
http://forums.moneysavingexpert.com/showpost.php?p=64540489&postcount=15
http://langcatfinancial.co.uk/2014/01/big-bristol-beasts-bring-beat-back-hl-unveils-pricing/

bownyboy

WoB wrote: »

Out of interest bownyboy, which platform did you use for investing in Vanguard?

I set up a Hargreaves Lansdowne account last October. The website is simple to use, easy to set up account and choose fund and they have an iPad app.

With all the changes recently to charges I suppose I better be checking if I'm getting the best deal. I only have £2000 invested and will be paying in £990 from April.