Vanguard LifeStrategy....

dunroving

Gadfium wrote: »

I got bored of trying to make the decision so picked two gilt funds: a Vanguard UK Long Duration and a Vanguard UK Government Bond. Those two, along with the bonds in the LS80% give me about 15% bonds in my mix.
I ain't that clever at this gig, so I am very much "suck it and see"



<ahem>...that too!

I have also added, just for a bit of fun and to see how it performs, a small side LS100% Equity fund. There's only about 2% of my small portfolio in there, but I wanted to see how it performs over time compared to the LS80%

The fund portion of my portfolio looks like this at the moment. It's mainly part Monevator "Slow and Steady", part my own thinking with a large dash of added ignorance.

Vantage LifeStrategy 80% -21.4%
Vanguard UK Government Bond Index Fund -9.2%
Vanguard U.K. Long Duration Gilt Index Acc -1.9%
Vantage LifeStrategy 100% -2.0%
HSBC FTSE 250 C -1.1%
BlackRock Emerging Markets Equity Tracker -1.1%
BlackRock Global Property Securities Equity Tracker -1.1%

That's running alongside some single stocks, cash and my pensions. My aim is to continue adding to the equity side over the next 10 years before making any major changes or moves to Inc funds.

Will it work? Blowed if I know, but my time horizon is 10- 15 years, so it should see some decent growth (I hope!)

Just my opinion, but from my own experience of dabbling, if I had the chance to go back, I'd stay away from single stocks completely, other than as a "flutter" with money I was comfortable with losing. There is a fun element to being invested in a company and following their fortunes/misfortunes. Also, it can be personally rewarding to invest in a company you believe in. Investing in a fund rarely has the same fun element (though the thread on the new Woodford Trust indicates otherwise).


I'd guesstimate my individual stock holdings have returned maybe -70% overall .... I no longer bother with them and have disinvested in those companies that didn't completely fold (i.e., Marconi; !!!!!!s).

Gadfium

dunroving wrote: »

Just my opinion, but from my own experience of dabbling, if I had the chance to go back, I'd stay away from single stocks completely, other than as a "flutter" with money I was comfortable with losing.

Mine are a little different as I acquire them through a mixture of Sharesaves and SIP with my employer. It would be hard to lose money on them as the Sharesaves were bought at an extremely low price (in some cases, at todays price, they have increased by 676% since I bought them). However, it's a lot of risk as there is a big chunk of money sitting in them, along with my job and pension, so I have a lot of exposure to my employer.

I have been gradually selling them on over the years and putting the money into other investments to reduce the exposure.

bowlhead99

dunroving wrote: »

I recall looking at the historical gains of the VLS20, 40 and 60 over a 5-year period and thinking they didn't seem that different (could be misremembering).

They have only existed for a 3 year period not the full 5...

What we've seen in the last few years is bonds and equities both increase at the same time. So if you had less equity growth through a lower percentage you would get more growth on the bond side instead. So, perhaps not a major difference in performance in the short period under review during this particular phase of this particular economic cycle.

In the long term however, equities and bonds typically act as opposites. The bond component will hold back the equities when they are champing at the bit to surge higher, but in a market pull-back or crash they will soften the blow. With a larger bond component you are giving up return to buy a volatility reduction.

This doesn't mean of course that a 60-80% bond component will insulate you from downturns over the next 3 years. We all know bonds are high priced and yielding low effective interest, and as soon as the economy picks up and nobody wants the low interest, the bonds should fall. If you hold those bonds when they fall, you will probably lose more money than you are earning from them in interest. But you are unlikely to lose as much money as quickly as if you held a lot of equities and they fell.

With 3 years to retirement the traditional view was to switch heavily to bonds, preserve the pot, and get ready to buy an annuity with as much money as you'd been able to preserve. That is a bit old hat these days because while it is clearly important not to lose all your money just before you need it, (a) annuity rates are poor compared to long term averages so people are not just aiming for one 'retirement day pot of cash' with which to buy an annuity and (b) people are living longer and wanting to have their assets invested longer to sustainably draw on for the long term.

Therefore while it might be eminently sensible to move into the funds with higher bond weighting, you do need to consider whether you might improve your overall 40 year retirement by keeping a healthy equities allocation at the cost of volatility and a potential early fall in your annual income. If you can plan for that with some cash that was put aside rather than purely being in bonds, you might do OK, and while gilts are not yielding much anyway it is not costing you much to protect against the downside risk by being in a low return cash fund instead of a lowish return gilt fund. Just a thought.

I am personally favouring strategic bond funds over dumb bond trackers although that is a higher risk solution, but there are other non-equity diversifiers out there too such as real estate, absolute return funds and so on. Or if you can handle the risk of higher yielding bonds there are other similar options with a 3-5 year time frame such as p2p lending if you can live without the tax wrapper.

I am nowhere near retirement unfortunately so those ideas might seem totally inappropriate for you!

dunroving

bowlhead99 wrote: »

They have only existed for a 3 year period not the full 5...

<<snip>>

Then I definitely was mis-remembering!


I <<snip>>'ed too soon - your points all resonate. I only really started contributing to pensions when I was 39, and was in the US so they were DC type schemes. The perceived wisdom over there was to drift towards high bond holdings as you got closer to retirement. Overall, US investors are more savvy because DC type pensions have been more the norm, but I agree with you that the "safety first" approach only applies if you need to protect your investments for some D-Day (e.g., buying an annuity).


As I continue calculating my personal economic forecast, I have built in the idea that X% needs maximum protection (lump sum at retirement to pay off mortgage), X% needs moderate protection (income to bridge years between "retiring" and state pension kicking in) and X% can be more long-term (dribble-feeding income between when the state pension kicks in and the Grim Reaper kicks in).

bowlhead99

dunroving wrote: »

Then I definitely was mis-remembering!


I <<snip>>'ed too soon - your points all resonate. I only really started contributing to pensions when I was 39, and was in the US so they were DC type schemes. The perceived wisdom over there was to drift towards high bond holdings as you got closer to retirement. Overall, US investors are more savvy because DC type pensions have been more the norm, but I agree with you that the "safety first" approach only applies if you need to protect your investments for some D-Day (e.g., buying an annuity).

US isn't unique in this really. Many UK DC pension funds incorporate a 'lifestyling' element just like the US 'target retirement date' funds where you switch to bonds as you get closer. It is only really the last few years where it has become obvious that both UK and US bonds are pricy and may not provide the downside protection hoped for.

As I continue calculating my personal economic forecast, I have built in the idea that X% needs maximum protection (lump sum at retirement to pay off mortgage), X% needs moderate protection (income to bridge years between "retiring" and state pension kicking in) and X% can be more long-term (dribble-feeding income between when the state pension kicks in and the Grim Reaper kicks in).

That's a pretty standard and sensible approach to managing retirement without an annuity. The trick is to get all the Xs right!

Good luck with it.

TheTracker

Ryan F appeared like a whirlwind in mid-2014, like the Sage of South London with all his tips and graphs and wealth of insight.

TheTracker wrote: »

I'll take a stab at what we have learnt.

On equities, he has said he has 20+ holdings. He recently declared
* Woodford (up 6% for RF in 2014, 12% of his portfolio)
* JPM New Europe (down 7.5%)
* Sanditon Europe (up 1%)
* First State Asia Pacific leaders (up 26%, "my best performer")

He has also declared holdings in
* Fidelity Global Property
* L&G UK Property PAIF
* BioTech Growth Trust
* AXA BioTech
* Neptune European Opps
* Lazard Emerging Markets
* M&G Global Emerging
* Vanguard Equity Income (yes really)
* Kotak India Mid Cap
* FirstState Infrastructure

As of September 2014 his "largest holdings" were
* Murray International ("core holding", 20% holding in October 2014)
* Edinburgh Trust (Woodford plus Edin was 40% in October 2014, but later said Woodford was 12%)

He often "favours" or "likes" or is "tempted by" or "contemplating" or "considering" funds without saying if he has any, including
* Newton Asian Income
* Slater Growth

...

Somehow from there he expects "10-12% above inflation is a realistic aim for my portfolio" which seems ambitious given the above information.

He disappeared early 2015 after being rumbled. Let's see how his portfolio did YTD, just before the end of 2015.

* Woodford (13.8%)
* JPM New Europe (-5.76%)
* Sanditon Europe (2.48%)
* First State Asia Pacific leaders (-1.73%)
* Fidelity Global Property (1.15%)
* L&G UK Property PAIF (9.82%)
* BioTech Growth Trust (5.8%)
* AXA BioTech (9.7%)
* Neptune European Opps (4.9%)
* Lazard Emerging Markets (-16.41%)
* M&G Global Emerging (-12.95%)
* Vanguard Equity Income (-3.30%)
* Kotak India Mid Cap (6.42%)
* FirstState Infrastructure (-2.89%)
* Murray International (-17.14%)
* Edinburgh Trust (12.63%)
* Newton Asian Income (-10.1%)
* Slater Growth (15.93%)

Which equally weighted comes to 0.7% for the year.
And weighted Murray 20%, Edi 28%, Woodford 12%, Rest 40% it comes to 1.87%.
A little less than his confident 10-12% forecast.

Since he said "the only income I'm earning this tax year will be from investments", and since we inferred he had less than £500k investments, this means his income was less than £9k this year. Anyone seen him on Benefits Street?

Vanguard Lifestrategy 60/40, the topic of this thread, and which he held such venom for, is up 1.13% for the year.

InvestInPoker

Presumably he moved into cash mid April though

[Deleted User]

Gadfium wrote: »

Mine are a little different as I acquire them through a mixture of Sharesaves and SIP with my employer. It would be hard to lose money on them as the Sharesaves were bought at an extremely low price (in some cases, at todays price, they have increased by 676% since I bought them). However, it's a lot of risk as there is a big chunk of money sitting in them, along with my job and pension, so I have a lot of exposure to my employer.

I have been gradually selling them on over the years and putting the money into other investments to reduce the exposure.

I know this an old post but... Very high risk if you ask me.

I had 10,000s of RBS shares being an employee. I think the lowest I got them was £1.48 finally selling up mid £20's [obviously these prices make no sense to the current pricing structure]. Made a fortune but many former colleagues basically lost the lot following the financial crash...

Gadfium

jeepjunkie wrote: »

I know this an old post but... Very high risk if you ask me.

Agreed, which is why I said this in the post:

Gadfium wrote: »

However, it's a lot of risk as there is a big chunk of money sitting in them, along with my job and pension, so I have a lot of exposure to my employer.

In order to minimise the risk I also said this:

Gadfium wrote: »

I have been gradually selling them on over the years and putting the money into other investments to reduce the exposure.

Sharesaves are actually very low risk as you can cash them in at any point, even after the maturity date and get the cash back (along with a bit of a bonus if you held them to term).
The SIP is different, though with a maximum of £150 per month you aren't playing with that much, in the great scheme of things. However, as you are buying shares immediately, then there is more risk.

jeepjunkie wrote: »

I had 10,000s of RBS shares being an employee. I think the lowest I got them was £1.48 finally selling up mid £20's [obviously these prices make no sense to the current pricing structure]. Made a fortune but many former colleagues basically lost the lot following the financial crash...

To be fair though, your risk was holding shares, not the Sharesave per se. Pretty much anyone on here would advise against holding a substantial portion of your overall portfolio in a single share. Even more so if that share is your employer and, potentially, your pension.

TheTracker

TheTracker wrote: »

Ryan F appeared like a whirlwind in mid-2014, like the Sage of South London with all his tips and graphs and wealth of insight.



He disappeared early 2015 after being rumbled. Let's see how his portfolio did YTD, just before the end of 2015.

* Woodford (13.8%)
* JPM New Europe (-5.76%)
* Sanditon Europe (2.48%)
* First State Asia Pacific leaders (-1.73%)
* Fidelity Global Property (1.15%)
* L&G UK Property PAIF (9.82%)
* BioTech Growth Trust (5.8%)
* AXA BioTech (9.7%)
* Neptune European Opps (4.9%)
* Lazard Emerging Markets (-16.41%)
* M&G Global Emerging (-12.95%)
* Vanguard Equity Income (-3.30%)
* Kotak India Mid Cap (6.42%)
* FirstState Infrastructure (-2.89%)
* Murray International (-17.14%)
* Edinburgh Trust (12.63%)
* Newton Asian Income (-10.1%)
* Slater Growth (15.93%)

Which equally weighted comes to 0.7% for the year.
And weighted Murray 20%, Edi 28%, Woodford 12%, Rest 40% it comes to 1.87%.
A little less than his confident 10-12% forecast.

Since he said "the only income I'm earning this tax year will be from investments", and since we inferred he had less than £500k investments, this means his income was less than £9k this year. Anyone seen him on Benefits Street?

Vanguard Lifestrategy 60/40, the topic of this thread, and which he held such venom for, is up 1.13% for the year.

Mid year 2016 update, folks.

YTD return for Ryan the Futuristic Active Soothsayer's portfolio stands at 1.4% (equal weighted) or 0.2% (allocated as declared, with a new year rebalance), compared with Vanguard LifeStrategy at 3.4%. Before fees/costs. (My simple 60/40 portfolio of trackers with a small/value tilt is at 5.0% ytd)