Is Vanguard LS a good idea for us?

Dav1970

Good morning everyone,

This is my first ever post regarding investing, so please be soft and gentle, kidding, give it to me the hard way, best way to learn I feel.

Actually, I'm not sure whether I should have started a new thread...

Anyway a little background, my other-half (not married) and I are both in our mid-forties, both working and renting (super low rent that is why we are renting).

We have no pension plans but a fair amount of savings. We have approx. £600.000 in Bonds and 50.000 cash in a super high interest account with Aldermore, kidding, the rate is poor but better than nothing.

We would like to invest £200.000 of our £600.000 pot into stocks and shares for the long term (20 to 30 years).



Apart from the research I have been doing (including the 60 odd pages of this thread) and read “The Intelligent Investor - Benjamin Graham” we do not have much knowledge of the Stock market and no interest in it either, so would make us passive investors. I feel, following the book’s advice, that index funds are the way to go for our situation.


They are so many Index funds to choose from that I am a little lost as to which one should I choose. From looking around it seems as if VanguardLS would be a good contender, well this one or another I thought no particular reason only that I read good things about it.

Since we should still be earning for the next 15 to 20 years or so we’d be quite willing to take some mild risks. Well by that I mean to go for the VLS 100% equity for myself and 80% for my other-half. One point which is not properly understood is: If we already have £400.000 in bonds is it pointless to also have a bond part in our VLS, or is it different?

I feel that a good strategy would be to drip feed over the course of one or two years the total (£100.000 each), so that would mean either £16.666 each going in every month if we chose the one year approach or £8333 each going in every month over a 2 years period, I could perhaps make my payments every 1st and my other-half's every 15th of the month to vary the chances?


We are thinking of taking the ACC version of the fund but then again we feel that perhaps we should make the most of the Capital gain allowance and go for the INC version but not too sure on this option at this stage!?

We were thinking of going with [FONT=&quot]Hargreaves[/FONT] Lansdown's as we already have our annual ISA/shares allowance with them (into the VLS 100% and 80%) but I read that they might be some more interesting choices for such an amount, but since we want to drip-feed the options are not as plentiful as if we were buying in one go, like the likes of IWeb, but please, please correct me if I’m wrong.


Anecdote or not: As I was talking to [FONT=&quot]Hargreaves[/FONT] Lansdown's about the possibility of drip feeding £200.000 over the case of a year or two they proposed to leave the full balance with them ? But why would I do that if I can set up a direct debit and have the rest of the money in a saving account or even a 6 month or 1 year bond in the meanwhile? I know they are a business but I would have thought that such an obvious thing would have been revealed by HL. (reading myself I do not seem to have put my point across very well), so in a nutshell, why would I leave my money with HL not earning anything while waiting to be dripped fed if I can make some kind of return by just sitting in a bank account??? Am I missing something???

So this is where we are at.

Any opinion, criticism is welcome.

Thank you for reading,

Dav1970

MarcoM

I think on here you will be told to see an IFA.
However I was wondering if you are getting any hassle from your bank regarding the transfer of large amounts of money between providers.

Archi_Bald

MarcoM wrote: »

I think on here you will be told to see an IFA.
However I was wondering if you are getting any hassle from your bank regarding the transfer of large amounts of money between providers.

Can still be done without an IFA/

Hassle from banks an be avoided if they are advised of large transactions beforehand, and any "fear" of banks should most definitely not stand in the way of investing the funds properly.

dunstonh

we do not have much knowledge of the Stock market and no interest in it either, so would make us passive investors.

It would either make you mutli-asset investors (which can be passive or managed) or use an investment service (which could use both methods).

Well by that I mean to go for the VLS 100% equity for myself and 80% for my other-half.

Ok. So, jumping right in at the deep end there. Are you sure you are at that risk level? A common mistake with new investors is to go above their risk profile.

If we already have £400.000 in bonds is it pointless to also have a bond part in our VLS, or is it different?

What corporate bonds have you got? Your post suggests fixed term deposits (misnamed as bonds) but not corporate bonds, strategic bonds, high yield bonds etc.

We are thinking of taking the ACC version of the fund but then again we feel that perhaps we should make the most of the Capital gain allowance and go for the INC version but not too sure on this option at this stage!?

It doesnt impact on CGT.

MarcoM

Archi_Bald wrote: »

Can still be done without an IFA/

Hassle from banks an be avoided if they are advised of large transactions beforehand, and any "fear" of banks should most definitely not stand in the way of investing the funds properly.

Personally I would not trust telling someone in a call centre that I may have 500k arriving in my current account.I am aware of the lack of checks carried out by banks on criminal records of their call centre staff...

Archi_Bald

Dav1970 wrote: »

We would like to invest £200.000 of our £600.000 pot into stocks and shares for the long term (20 to 30 years).

why just a third of your cash?

Dav1970 wrote: »

read “The Intelligent Investor - Benjamin Graham” we do not have much knowledge of the Stock market and no interest in it either, so would make us passive investors.

haven't read that book myself but it seem to pretty much agree with "Smarter Investing" by Tim Hale, which is often quoted as the best. Passive investing is also promoted by monevator which is an excellent website.

Dav1970 wrote: »

I feel, following the book’s advice, that index funds are the way to go for our situation.


They are so many Index funds to choose from that I am a little lost as to which one should I choose. From looking around it seems as if VanguardLS would be a good contender, well this one or another I thought no particular reason only that I read good things about it.

many would agree with you. There's a huge long VLS thread on this forum, worth digging it out.

Dav1970 wrote: »

We were thinking of going with [FONT=&quot]Hargreaves[/FONT] Lansdown's as we already have our annual ISA/shares allowance with them (into the VLS 100% and 80%) but I read that they might be some more interesting choices for such an amount

You should be able to get your VLS cheaper overall in other places. Use snowman's spreadsheet to work out your options - link to it is in post 1 of https://forums.moneysavingexpert.com/discussion/3153942

Dav1970 wrote: »

As I was talking to [FONT=&quot]Hargreaves[/FONT] Lansdown's about the possibility of drip feeding £200.000 over the case of a year or two they proposed to leave the full balance with them ?

This proposal alone would be enough reason for me to immediately begin ISA transfers to another broker/platform. And, of course, not invest a further penny with them.

jimjames

As above, why do you need to hold so much cash? Are you intending to buy a property in cash sometime or is it all for retirement? If so you may want to look at more being invested. As of this year you can put £30k pa into S&S ISAs.

You say your annual ISA allowance is with HL? You've not mentioned any S&S ISA investments in your post, how much do you already have in S&S ISAs or other investments?

Have you considered pensions too if you have none? You'll get tax relief on that money which may make it more tax efficient depending on your tax situation. If you are employed then your employer will have to set up and pay into a pension for you, they may also match your contributions which is effectively free money.

xylophone

We have no pension plans

No occupational pensions? https://www80.landg.com/DocumentLibraryWeb/Document?reference=AE_readiness_AE_Explained.pdf

http://www.hmrc.gov.uk/incometax/relief-pension.htm


Or are you self employed?

https://www.moneyadviceservice.org.uk/en/articles/pensions-for-the-self-employed

http://www.unbiased.co.uk/

Dav1970

[FONT=&quot]Whoaaa so many replies so quickly, thank you.

I will try to answer every question in order if I manage to use the quote button properly...[/FONT][FONT=&quot]


@MarcoM

However I was wondering if you are getting any hassle from your bank regarding the transfer of large amounts of money between providers.

No not really, the money is in different bank accounts in term deposits because of the £85.000 protection scheme.


@dunstonh

we do not have much knowledge of the Stock market and no interest in it either, so would make us passive investors.
It would either make you mutli-asset investors (which can be passive or managed) or use an investment service (which could use both methods).

OK thanks

Well by that I mean to go for the VLS 100% equity for myself and 80% for my other-half.
Ok. So, jumping right in at the deep end there. Are you sure you are at that risk level? A common mistake with new investors is to go above their risk profile.

Since we have almost $400.000 in Bonds(fixed term deposits) already I thought we could afford that level of risk with $200.000,been approx 30% of our capital ?

If we already have £400.000 in bonds is it pointless to also have a bond part in our VLS, or is it different?
What corporate bonds have you got? Your post suggests fixed term deposits (misnamed as bonds) but not corporate bonds, strategic bonds, high yield bonds etc.

Thanks that's it, I do get it now, all we have are fixed term deposits and NOT bonds!!! That gives you a level of my understanding of all this [/FONT][FONT=&quot]

We are thinking of taking the ACC version of the fund but then again we feel that perhaps we should make the most of the Capital gain allowance and go for the INC version but not too sure on this option at this stage!?
It doesnt impact on CGT.

Ok thanks


@Archi Bald

We would like to invest £200.000 of our £600.000 pot into stocks and shares for the long term (20 to 30 years). why just a third of your cash?

Because my other-half is already so scared of the Stockmarket and if it was up to her she'd have everything into fixed terms deposit although I tried to explain to her the magic of inflation the best that I could so I thought that investing 30% of our pot was about right??? But apparently?

[/FONT]

[FONT=&quot]read “The Intelligent Investor - Benjamin Graham” we do not have much knowledge of the Stock market and no interest in it either, so would make us passive investors.[/FONT]
[FONT=&quot]haven't read that book myself but it seem to pretty much agree with "Smarter Investing" by Tim Hale, which is often quoted as the best. Passive investing is also promoted by [/FONT][FONT=&quot]monevator which is an excellent website. [/FONT]

[FONT=&quot] To be honest it wasn't the most fun I had while reading a book and had to read only a few pages at a time to make sure I understood half of it [/FONT]

[FONT=&quot]They are so many Index funds to choose from that I am a little lost as to which one should I choose. From looking around it seems as if VanguardLS would be a good contender, well this one or another I thought no particular reason only that I read good things about it.[/FONT]
[FONT=&quot]many would agree with you. There's a huge long VLS thread on this forum, worth digging it out.[/FONT]

[FONT=&quot]Thanks and I did read every single post of the 62 pages...not in one go that is[/FONT][FONT=&quot]:)

[/FONT]

[FONT=&quot]We were thinking of going with [/FONT][FONT=&quot]Hargreaves[/FONT][FONT=&quot] Lansdown's as we already have our annual ISA/shares allowance with them (into the VLS 100% and 80%) but I read that they might be some more interesting choices for such an amount[/FONT]
[FONT=&quot]You should be able to get your VLS cheaper overall in other places. Use snowman's spreadsheet to work out your options - link to it is in post 1 of [/FONT]

[FONT=&quot]Thanks I will give it a read...
[/FONT][FONT=&quot]
[/FONT]

[FONT=&quot]As I was talking to [/FONT][FONT=&quot]Hargreaves[/FONT][FONT=&quot] Lansdown's about the possibility of drip feeding £200.000 over the case of a year or two they proposed to leave the full balance with them ?[/FONT]
[FONT=&quot]This proposal alone would be enough reason for me to immediately begin ISA transfers to another broker/platform. And, of course, not invest a further penny with them. [/FONT]

[FONT=&quot]Yes that's what I'm thinking too...

@[/FONT][FONT=&quot]jimjames[/FONT]
[FONT=&quot]

As above, why do you need to hold so much cash? Are you intending to buy a property in cash sometime or is it all for retirement? If so you may want to look at more being invested. As of this year you can put £30k pa into S&S ISAs.

When you mean cash you mean the £50.000 that are in a saving account or the £400.000 which are in bond/fixed term deposits? And yes it is mainly for retirment and no we are not planning to buy a proprety. We do use every year our full allowance into S&S Isa's

You say your annual ISA allowance is with HL? You've not mentioned any S&S ISA investments in your post, how much do you already have in S&S ISAs or other investments?

We started last year for the first time. So a full year under our belt.

Have you considered pensions too if you have none? You'll get tax relief on that money which may make it more tax efficient depending on your tax situation. If you are employed then your employer will have to set up and pay into a pension for you, they may also match your contributions which is effectively free money.

We do have our ordinary pensions from work that is but nothing private or anything.

@xylophone

We have no pension plans
No occupational pensions?

[/FONT][FONT=&quot]Sorry what I meant is that we do have our pensions from work but not a private one.

[/FONT][FONT=&quot]Once again than you for the feed back! :beer:
[/FONT]

Perelandra

I think you're looking at this in the "right" way, and (personally) buying the Vanguard LS fund wouldn't be a serious mistake. However, I don't think your proposed strategy is likely to be optimised for you- there will probably be "better" ways of identifying and achieving your objectives- and this is the service that an IFA could do for you. Given the sum of money involved, I think I'd probably go down that route if I were in your position. (And might help alleviate some of your partner's concerns!).

That being said, it sounds like you're doing your research before jumping in, so you're heading in a good direction.

Good luck.

oldtoolie

Beefing up your pension might be a good idea. Look at a SIPPS -- self invested personal pension. The tax treatment is more favourable than an ISA. Downside is no access until nearer retirement age.

Within a SIPPS, you can invest in a wide range of assets.

The two things you need to look at are:
- structuring assets to mitigate taxes
- selecting safe and productive investments within your chosen risk level.