Should we Invest in only one fund?

Audaxer

enthusiasticsaver wrote: »

That is certainly a consideration but I am treating this bucket of money as a pot used for separate purposes. The Vanguard 60 is relatively medium to low risk as there is a possibility we may need to draw on it within the next 10 years in our early retirement up to age 70. This money I think will only be needed if we need care in later life so we are prepared to take more risks so it might be higher equity or I may look into offsetting risk by doing global equity for 50% and global bond for 50%.

I have 6 months to consider anyway so just bouncing ideas around at the moment.

I wouldn't consider the VLS60 medium to low risk - not at retirement age anyway if you may need to draw on it in the next 10 years. I initially went for a VLS40 and transferring further funds at present - and still pondering whether to put that batch into the VLS40, or a VLS60 so it is 50/50 between bonds and equities. As the ITs I am going to invest in for income will probably be mostly equities thinking I should stick with the VLS40.

Voyager2002

VLS60 is not "putting all your eggs into one basket" because it is already extremely diverse. However, you said that you are willing to accept more risk in the hope of possible higher returns, so you might look at a range of higher-risk areas. For example, my investments in Russia, in World Health Science, and in India have done very well over the last few years but might fall back tomorrow. It is unlikely that all three of these high-risk areas will rise or fall at the same time, so you might consider putting prudent amounts of money into all of these, along with other sectors that you think offer the possibility of strong growth.

Oh: income funds tend to select companies that are well-established in mature markets and pay reliable dividends: these are not the kinds of companies that offer the greatest potential for growth.

enthusiasticsaver

Thanks for the responses everyone and the general opinion seems to be if we do not need the income then go for the acc fund instead for growth. Although I am willing to consider slightly higher risk - more equities than VLS60 I don't want to stray into very high risk areas.

I will check out ITs.

Glen_Clark

enthusiasticsaver wrote: »

Although I am willing to consider slightly higher risk - more equities than VLS60 .

Don't forget the risks of holding Sterling. The equities side is split around thousands of the world's biggest companies, most of whom could be more solvent than the British Government. Having doubled the 300 year old National Debt in 6 years, we are still consuming more than we make, and borrowing to pay for it. This can't go on, but I see no plans to deal with it. Maybe they do have plans to deal with it, but are too scared to reveal them before the election?

chockydavid1983

I read about that during the referendum campaign last year and wondered about that too. The national debt is only going one way atm and obvs increased a lot with the fall in sterling too. It really is a ticking time bomb and I'm surprised how little it's talked about compared to the deficit. Obvs reducing/ eliminating that would help but longer term something more substantial needs to happen.

Glen_Clark

The most important statistic is the current account deficit, but they don't like to talk about that. Or the amount of off balance sheet debt like PFI. They prefer to count house price inflation as 'Growth' and talk about that instead

bugbyte_2

Glen_Clark wrote: »

UK Bond rates are now over 2% behind projected inflation, which suggest to me they are over valued, so I would rather spread my cash around best buy retail savings accounts - getting a better rate than the professional big investors can get through bonds..
Or am I missing something here?

My thoughts exactly*. My portfolio is 60% equities in trackers (mainly Blackrock Consensus 100 + Legal & General Health & Pharmaceutical (as this is a defensive sector that has traditionally done better in downturns) plus region specific trackers to rebalance) and 40% in the highest interest accounts I can get. I got rid of bonds a couple of years ago.


*not that I know anything!

chockydavid1983

Yeah, I remember reading about both of those too. It does seem that the current strategy is to just ignore everything and pretend that it's all going to be OK in the end.
But what could actually help? Do we basically just need to get more skilled up and productive as a nation? I know some things like PFI we can't do much about now I guess.

enthusiasticsaver

I think it is called "kicking the can down the road". Low interest rates and high inflation is supposed to trick us into thinking the national debt is going down. It isn't. Mind you almost every other developed country is the same.

bigadaj

It's an interesting scenario, record low interest rates were supposed to stimulate demand as well as inflate debt away, however supply in most areas has been unconstrained and inflation has stayed stubbornly low.

So the main useful effect has been to devalue currency, sterling particularly but also all the major currencies, this is evidenced in the increase in asset prices, especially shares and property.

So it's sort of been effective in reducing debt as the value of the pounds owed has decreased and the excess demand for low risk assets has led to record low gilt and other government bond yields, in some case governments getting paid to issue debt.