Is a Vanguard Lifestrategy investment all you need

Camster

I started investing in September last year and decided to go for a stocks and shares ISA investing in Vanguard Lifestrategy 80 with Halifax.

I will be able to add to my investments in April when the new ISA allowance comes in, and I'm looking for some advice on the options for this. I'm not sure if I should just buy more of the Lifestrategy 80 fund, or if it would be better to diversify with something else.

jimjames

Until you get to a total of several years ISA allowances, so over say £50k then yes it should be all you need

Camster

I transferred in some previous years cash ISA's I had, so my total investment by April this year would be over £50K.

bowlhead99

Have your circumstances changed in the four months since you started investing?

The obvious low cost and lazy option is to stay with what you have. If it was right (on a long term view) for the first £15k or £30k or whatever, of your ISA portfolio as of 2016/17 there is absolutely no reason why it shouldn't be right for the next £20k in 2017/18. If it's not right for that next £20k you would have to ask yourself why it's still right for your existing holdings.

However, this is only true to a point.

When you have only, say, £1000 invested, 10% of your portfolio is £100. If that particular 10% does well or badly, and outperforms or underperforms the average of the rest of the portfolio by 5% growth or loss in a year... that incremental 5% lost or gained on the hundred quid is a fiver. Well done, your labouring over investment decisions for that tenth of your portfolio made you (or lost you) a pint of beer in your local over the entire year. In the grand scheme of things it is not worth worrying about whatsoever. Stick all your money in a simple cheap multi-asset fund and get on with your life.

Once you have several tens of thousands invested, each ten percent of your portfolio is several thousand pounds, and the ups and downs and relative differences in asset classes can make more absolute differences to your returns. So, by the time you have £50k invested, it can be worth evaluating whether the path on which you've set off is still right for *all* your money.

By the time you get there, and have done some research, you may have some other ideas about things that could be useful in your portfolio that Vanguard 80 doesn't cover. Smaller companies, real estate, any particular specialist theme you are interested in for a minor part of the portfolio.

However, to me, it sounds like with your current portfolio size and knowledge levels you don't need to worry about that at the moment.

Another point about portfolio size is that as it goes up, the general volatility becomes much bigger figures and may highlight your true risk tolerance and capacity for losses. For example:

- you have £15k in Lifestrategy 80 and it drops 35%+ with the global equity markets over the year, that's not much more than five grand. Maybe you earn that in a month. Over the next year or so following that, even if the market doesn't recover, or drops a bit more, your next annual ISA contribution will top up your fund back up to where it was or higher. Shrug and move on, because investing is a long term game.

- you have £100k in lifestrategy 80 and it drops 40%, £40k. Maybe that's more than your entire year's net salary. You promptly crap yourself, and sell out to avoid further losses, and stop investing, guaranteeing you are stuck with that loss because the market eventually goes back up without you. It turns out that VLS80 was not the right product for you to invest £100k in, because you couldn't handle a loss like that on substantial amounts of money. You should have been in VLS60 or a fund that was risk targeted and aiming for lower volatility.

So, while I haven't got anything to go on to recommend any changes, as you haven't explained your goals or preferences, the answer is probably that what you have is fine as the building blocks of a long term portfolio, but eventually you will want to make some tweaks. Use the next couple of years (or less, if you are investing quickly) to figure out what they might be.

Camster

Bowlhead, thanks for your detailed reply. I don't have any immediate need for the money I am investing, so I'm probably looking at a 10 year plus investment time frame.

I understand that investing should generally be a long term commitment, so given my situation, is there anything else you could suggest I could look at for my investments within my ISA?

AnotherJoe

As BH says, consider areas that VLS doesn't invest in - property, smaller companies for example.
Or you might decide that you'd like to focus a bit more on areas you think will do well over the next 10+ years - Healthcare and Emerging Markets to pick two.

Ray_Singh-Blue

Yes. Simple and all you need.

I think a mixture of inexperience, vanity and hubris prevents many of us from accepting this. "Surely I can do better than average". I'm certainly guilty of these things.

Average is actually very, very good. It is 4% or 5% above inflation. If private investors lose on average 6% per year to charges and bad decisions, their actual returns may be below inflation.

For what it's worth, I keep a spreadsheet & my investments have only outperformed VLS60 in 2 out of the last 8 years.

ColdIron

Ray_Singh-Blue wrote: »

For what it's worth, I keep a spreadsheet & my investments have only outperformed VLS60 in 2 out of the last 8 years.

It was only launched five and a half years ago

Ray_Singh-Blue

ColdIron wrote: »

It was only launched five and a half years ago

Yes sorry, I meant 2 out of the last 6 years. Outperformed VLS60 in 2011 and 2016. Underperformed in 2012, 2013, 2014 and 2015. Biggest underperformance -9% in 2015. Best +3% in 2016. More self-flagellation here...

enthusiasticsaver

I only invest in vanguard lifestrategy and with stocks and shares isas for both my husband and I, a sipp for me and share dealing accounts waiting to be moved gradually into isas our portfolio is now over £100k. It started at £500 and gradually increased as we moved other savings into it. It is well diversified and although there is no property we are already exposed to that by having 2 properties so I see no reason to add anything else to the mix. I don't have the inclination or knowledge to choose other funds and keep rebalancing so am just looking for a well diversified portfolio with low charges.

So yes I would say just sticking with Vanguard is ok regardless of amount. Lazy it may be but if it works for £10k why not £100k so long as you happy with the fact that volatility may be more with higher figures?

BLB53

I also have LS60 in my Halifax ISA and, yes it is all I probably need and has provided a good return for me over the past 2.5 yrs.

I have also an ISA with Youinvest and hold a few investment trusts - Edinburgh, City of London, Scottish Mortgage and a couple of property REITs - all for natural income but their collective returns are no better and the charges are higher so I think you could do a lot worse than just stick with the simple strategy.

I have 'DIY Simple Investing' which suggests a one stop multi asset strategy is probably all you need and uses the Vanguard fund as an example. Also 'Investing Demystified' suggests all you need is a global equity index fund and a bond fund which, reading between the lines, more or less points to VLS.

The only reservation I would have currently is the fall in sterling may create a headwind for the global funds when the pound recovers over the next year or so.