How good are vanguard

enthusiasticsaver

I am in similar position to you. Age 57, retiring at the end of this year and I started investing in Vanguard Lifestrategy 60 a few years ago and have been happy with the performance of it so far. My husband is already drawing on his occupational pension and I will be taking mine in 2020 and we have a significant cash buffer though so our timeline is longer than yours.

If you know you definitely will need it in 5 years I would hesitate to put the whole of your savings into investments unless you have other cash to live off. The stock market may well be low in 5 years and you do not want to be forced into selling at a loss.

I chose this fund for the following reasons:
It is well diversified being a global multi asset fund which is generally accepted to keep the risk of loss lower.
The charges are low
There is a lot of information about it on this forum and seems to be popular (no guarantee of performance I know but I am happy with how it has performed until now)
It is already balanced so there is no need to keep rebalancing it to reflect the global economy.

I read lots of monevator, trustnet articles etc before investing as I was a complete novice.

Audaxer

bowlhead99 wrote: »

Well, the text from Jamesd that you quoted literally contained a clickable link to a post where he mentioned buying examples of the type of tracker funds held by the Lifestrategy product for a lower cost than you would pay for the Lifestrategy product.

Essentially, you can look at what they hold (a selection of equity indexes and bond indexes) and buy those components yourself. For example you can get a UK equities tractor and a US equities tracker (the largest holdings in the 80% or 100% equities fund) each at under 0.1% instead of over 0.2%.

You would obviously need to perform the rebalancing yourself which would leave you doing more work. And if the amounts involved were substantial enough for a 0.1% saving to be worth having, you'd likely be using a provider who charges their platform/broker fees on a transactional basis rather than as a percentage of asset values, hence you might be incurring higher trading fees for the extra rebalancing trades that you have to do to periodically to keep the allocation profile in line with your target.

Still, 0.1% saved every year on £100k invested is about an extra £1k at the end of the decade, with which to buy more investments or retirement treats.

Bowlhead, I had previously been thinking of buying 5 separate index funds and doing my own rebalancing, but the detailed reply from you linked below, made me decide to go for the VLS option instead:
https://forums.moneysavingexpert.com/discussion/5613275=
I think as the OP is new to investing, a VLS60 or VLS40 would be a better option than trying to pick individual index funds and rebalance regularly.

If however he is limiting himself to only a 5 year timescale, even a VLS40 or any investment could be too risky.

Sun-Is-Fun

Have you thought about the Vanguard Retirement Funds? You choose which year you want to retire and it goes in 5 year cycles, e.g. Vanguard retirement fund 2025, etc.

dunstonh

mjfp509 wrote: »

Have you thought about the Vanguard Retirement Funds? You choose which year you want to retire and it goes in 5 year cycles, e.g. Vanguard retirement fund 2025, etc.

The problem with that is many of those people are not going to convert to annuity any more and de-risking is not required.

username12345678

dunstonh wrote: »

The problem with that is many of those people are not going to convert to annuity any more and de-risking is not required.

I sort of get the argument that de-risking just prior to buying an annuity was a historically prudent course of action, whereas for those with an non-annuity investment horizon reaching 30 or 40 years after actual retirement it could be introducing risk through lower expected returns.

My question would be at what stage do you start transitioning to a less volatile/risk based portfolio in the second scenario? Perhaps once 'safe' fixed income investments are generating enough for all expenses, plus a bit? God knows when gilts will be producing those returns again.

jamesd

Never would be a best time to transition often, because the highest expected safe withdrawal rates are in the 75-100% equities range, with small caps normally the highest common but most volatile common choice. Rather than changing because of age, set a level that you're sufficiently comfortable with at any age, influenced by your intellectual knowledge that equities over the long term are an excellent choice for making you better off.

But that's not actually true because there are points when you can both decrease volatility and increase safe withdrawal rate:

1. State pension deferral, at 5.8% increase per year of deferring is often above the safe withdrawal rate and even if not is useful longevity protection.
2. There comes an age and health combination where annuities can pay more than a safe withdrawal rate that doesn't fully account for life expectancy, providing longevity protection as a valuable part of the deal.

Then there can be a point were you just have so much that you can't conceive of needing more and might want to reduce hassle and worry factors. Catches here can include potential health bills and care costs, since even with the NHS you can pay millions potentially for earlier, different or better treatment than offered by the NHS. Some mixture so you continue to get growth but so that you have enough guaranteed that you don't need to worry even if it drops a lot or exec think about it could be a useful blend. Advisers to help manage things can also be a useful buy at this sort of stage.