Good time to invest in Vanguard LS80?

frugalsaver123

Hi all,

I am a complete investing novice, and would like to ask whether now is a good time to invest in Vanguard LS80 via a S&S ISA.

I know none of us can predict the future but, as 2016 was a very good year for the fund, would it be advisable to invest in it at this point? Is it good practice to invest in a fund after an unusually good year?

As for the money I want to invest, I see it as my 'life' savings. I'm currently 28 y/o and already have some savings in easy-access cash ISAs.

Thanks.

dunstonh

I am a complete investing novice, and would like to ask whether now is a good time to invest in Vanguard LS80 via a S&S ISA.

That is a higher risk fund. Not speculative level but at the upper end and above the average UK consumer. I mention that because of your question about timing. That is a very novice thing to ask. It also suggests concerns about losses.

would it be advisable to invest in it at this point?

If you are going to invest then you need to be aware that there will be negative periods and positive periods and that you cannot time these things.

Is it good practice to invest in a fund after an unusually good year?

It wasn't unusually good. Much of it is nothing to do with the stockmarkets but due to sterling falling quickly in a short period.

One of the best years on the markets in modern history was followed by four positive years of growth. However, they could easily have been four years of negatives. You just dont know.

The only thing you know is that you will at some point see 30-40% losses on that invest. You wont know in advance when that will happen. You need to accept it or reduce your risk level (but still accept that loss periods will occur).

frugalsaver123

Thanks for your reply Dunstonh.

The main reason I ask about timing is because I had planned to invest a lump sum at one point, rather than drip-feed my investment each month.

dunstonh

The main reason I ask about timing is because I had planned to invest a lump sum at one point, rather than drip-feed my investment each month.

Statistically, the odds are that you will get lower returns that way. However, you wont know until down the road and look back.

This again suggests risk concerns. Are you sure the volatility levels of VLS80 are within your behavioural tolerance?

frugalsaver123

It's hard to say - I don't think I'll know until I invest a bit and see how it goes.

My main motivation for investing in a fund is to simply beat the current cash ISA rates, so I could perhaps target a less volatile fund.

Would VLS60 be a good, less volatile alternative? Looking at the numbers there doesn't seem to be a great deal of difference between this and VLS80, just the losses and gains are slightly less with the former. I suppose it would maintain it's value much better should a drastic change in the markets occur.

dunstonh

It's hard to say - I don't think I'll know until I invest a bit and see how it goes.

Ok, think of it this way.

You invest £20,000 in VLS80. When you get your first statement through and its worth £13,000 and you have lost £7000 in value, what would you do?

Would VLS60 be a good, less volatile alternative?

It has a lower volatility. Same question as above but £20k down to around £14,500?

nellis10

FWIW I opened my very first ISA today. I did it with Charles Stanley Direct (mainly because I get an error trying to open the Halifax one) and I'm also investing 100% in the VLS80. However I am only starting with £100/month but intend to keep it in there for about 10-15 years depending so will hopefully ride out any storms/volatility.

When I can up that amount I will offset it with a steadier VLS40 or even a retirement fund.

But it's a gamble and I figure I can eat junk for £100/month so it's money I can afford to risk.

Audaxer

dunstonh wrote: »

Ok, think of it this way.

You invest £20,000 in VLS80. When you get your first statement through and its worth £13,000 and you have lost £7000 in value, what would you do?

It has a lower volatility. Same question as above but £20k down to around £14,500?

If it was me in that situation with either fund, I'd hold on to it hoping it would recover. I'd also seriously consider investing more into the fund at this lower value. Would that be a good move?

dunstonh

Audaxer wrote: »

If it was me in that situation with either fund, I'd hold on to it hoping it would recover. I'd also seriously consider investing more into the fund at this lower value. Would that be a good move?

It would suggest you have the stomach for it and would not make a rash decision.

Audaxer

dunstonh wrote: »

It would suggest you have the stomach for it and would not make a rash decision.

Looking at the VLS 60% Equity, does this give a decent diverse spread of index trackers for a passive investing portfolio, or should a passive portfolio contain other index trackers?

If say, investing the full ISA allowance of £20k next financial year, would it be safer to invest monthly into the fund rather than as a lump sum?

dunstonh

Looking at the VLS 60% Equity, does this give a decent diverse spread of index trackers for a passive investing portfolio, or should a passive portfolio contain other index trackers?

It has limitations but it does what it is intended to do. Some prefer the L&GMI which has a wider spread and has a some active management in there.

If say, investing the full ISA allowance of £20k next financial year, would it be safer to invest monthly into the fund rather than as a lump sum?

Safety has nothing to do with it. Statistically, phasing results in lower returns more often than higher returns. However, you wont know which option was best until 12 months later when you look back and wish you had done it the other way