Reducing equity share over time

chockydavid1983

Hi guys

My monthly drip feed investment into Vanguard Life Strategy 100% Equity will be starting soon.

I was wondering if there is a tool or calculator I can use to gradually reduce my equity share over time, e.g. by 1 or 1.5% per year.

Thanks,
Chris.

bowlhead99

Yes, there is a calculator built into most computer operating systems, smartphones etc. Or you can simply type your calculation into the google search engine e.g. https://www.google.co.uk/?gws_rd=ssl#q=1%25+of+1000

If you have £1000 of investments at the end of year one, and wanted to reduce your equities exposure to 99% instead of 100%, you'll find that 1% is £10. So you could have £990 of the VLS100 and £10 of a non-equities investment.

Or you could have £987.50 of the VLS100 and £12.50 of the VLS20; there are many ways to do it.

You'll find maintaining such highly specific ratios quite difficult, as for example if you're drip feeding £100 a month and only want, say, 97% equities throughout year 3 of your investing journey- you would usually need to divert a tiny amount of money into a low equities fund to get that £97 equities, £3 non-equities allocation from your new money. There aren't any funds with £3 monthly minimums so you'd just put the £3 in a savings account or accept a greater proportion of bonds than you really wanted, and maybe sort it out with a re-balance once a year.

chockydavid1983

Thanks bowlhead99.
I was aware that I could calculate it manually and do a rebalance once a year but I was looking for something that could calculate how to adjust my drip feed to gradually transition down to a certain equity share.
However, since thinking about it some more I've realised that it would have to be quite complex in terms of taking into account not only contributions to funds but also growth so doing it manually probably makes more sense.

Thanks,
Chris.