Vanguard Target Retirement 2055 Fund

bostonerimus

Zola. wrote: »

What would you recommend my partner does? Perhaps start her own S&S ISA and setup a direct debit into a widely diversified fund like Vanguard LS 100? She has a basic pension already through her work (Aviva Pension - Diversified Assets Fund II S6), but at present is paying in 6%. Her work pays a measly 1%. Or is the sensible (and more obvious) option just getting her to put more into her work based pension? I am leaning on her having her own S&S ISA running on the side, as its another horse in the race.

The flexibility of an ISA is attractive having some tax free growth and tax free withdrawals is a nice complement to taxable pension withdrawals. Just realize that you get income tax deferral on the pension contributions and the ISA deposits are made after tax.

bostonerimus

Vanguard Target Retirement 2015 is 45% equities and 55% fixed income.......that's a little conservative for me as I started retirement in my mid 50s with a 60/40 mix, but I know plenty of people around age 65 with close to a 50/50 allocation.

The problem with being advised or sold something is that people sometimes don't know what they have and why they have it.

BLB53

As mentioned higher up, these are lifestyling funds

No, not as I have understood lifestyling funds in the past which aim to move the portfolio to predominantly cash or safer bonds such as government bonds closer to retirement i.e age 65.

With the Vanguard funds they reduce from 80% equities in mid 40s but are still 50% equities at age 65 yrs and it is not until age 75 yrs that the equity bottoms out at 30%.

This seems very sensible to me and is why I maintain they should not be regarded as lifestyling funds.

dunstonh

This seems very sensible to me and is why I maintain they should not be regarded as lifestyling funds.

What do you call a fund that reduces risk automatically over your life?

Linton

However you categorise the funds, I see a world of difference between selling simple multi-asset funds with a range of risks as suitable for an inexperienced unadvised investor and selling funds which change the asset allocation over time on the same basis.

Setting an appropriate asset allocation over time is very dependent on factors far beyond the risk and the date. For example it may be very different if the investor needs the money to provide a steady income or doesnt need the money at all, using the investments to provide an long term inheritance. Or the investor may actually want to buy an annuity - who nows what annuity rates will be in 2055? Is 50/50 at 65 right for all these investors?

In my view promoting the Target funds as a one size fits all, sensible default option is irresponsible.

Not_Me_Officer

Sorry to hi-jack

I have just finished John Edwards DIY Simple Investing. Granted it doesn't have a lot of pages so it's not going to cover every angle but it gave me the confidence to go it alone and one thing that seemed to get repeated was that passive investing, index trackers statistically over the years beat managed investing. There were some managed funds that did better but overall the passive approach performed better.

And the VLS product seemed to get recommended. I'm sure there's other similar alternatives that aren't Vanguard.

So i came from it thinking i would look out the VLS80, VLS100 and the VTR2040 or VTR2045 since i will turn 60 in 2043 (i reference 60 as i had the S&S LISA in the back of my mind) and then see what i like the look of the most.

But now i read all these run the risk of 'bad advice' were they to come from an IFA?

Knocks my confidence a little, especially when they sounded so good.

coyrls

Not_Me_Officer wrote: »

Sorry to hi-jack

I have just finished John Edwards DIY Simple Investing. Granted it doesn't have a lot of pages so it's not going to cover every angle but it gave me the confidence to go it alone and one thing that seemed to get repeated was that passive investing, index trackers statistically over the years beat managed investing. There were some managed funds that did better but overall the passive approach performed better.

And the VLS product seemed to get recommended. I'm sure there's other similar alternatives that aren't Vanguard.

So i came from it thinking i would look out the VLS80, VLS100 and the VTR2040 or VTR2045 since i will turn 60 in 2043 (i reference 60 as i had the S&S LISA in the back of my mind) and then see what i like the look of the most.

But now i read all these run the risk of 'bad advice' were they to come from an IFA?

Knocks my confidence a little, especially when they sounded so good.

The "bad advice" comment related to the Target Retirement funds not the Life Strategy funds but, as has been pointed out, the Target Retirement funds are not designed with the purchase of an annuity in mind and so I'm not sure that the annuity point applies. It might be that the change over time might not align with a client's risk profile and that would be something that an IFA would have to worry about.

Linton

Not_Me_Officer wrote: »

Sorry to hi-jack

I have just finished John Edwards DIY Simple Investing. Granted it doesn't have a lot of pages so it's not going to cover every angle but it gave me the confidence to go it alone and one thing that seemed to get repeated was that passive investing, index trackers statistically over the years beat managed investing. There were some managed funds that did better but overall the passive approach performed better.

I and quite a few other people on this forum would disagree, but we wont go into that now! It's covered in multiple other threads to no particular conclusion.

And the VLS product seemed to get recommended. I'm sure there's other similar alternatives that aren't Vanguard.

You cant fault Vanguard's PR.

So i came from it thinking i would look out the VLS80, VLS100 and the VTR2040 or VTR2045 since i will turn 60 in 2043 (i reference 60 as i had the S&S LISA in the back of my mind) and then see what i like the look of the most.

But now i read all these run the risk of 'bad advice' were they to come from an IFA?

Knocks my confidence a little, especially when they sounded so good.

Despite what you may read in some books there are no simple right answers. The best you can hope for as a new investor is not to get things too wrong. If you want something simple and not likely to be very wrong I would advocate going for the appropriate VLSxxx or the equivalents from L&G etal. By the time you get closer to 2040 or 2045 you will surely have the experience to configure your portolfio for yourself.

BLB53

But now i read all these run the risk of 'bad advice' were they to come from an IFA?

I do not accept that it would in any way be 'bad advice' to recommend the Vanguard TR funds.

If you are deciding to go DIY then do your research, draw your own conclusions and make your decisions...but ignore all the 'chatter' and 'noise' which will only confuse and cloud your judgment (imho!).

Linton

BLB53 wrote: »

I do not accept that it would in any way be 'bad advice' to recommend the Vanguard TR funds.
...

An IFA could make a reasonable and justifiable proposal for a client to go for a VTR fund were that to be demostrably appropriate for the clients circumstances. Where "bad advice" comes in is advocating going for these funds as a default basis for long term investment planning not knowing the clients circumstances. And one wouldnt know what a clients circumstances may be in say 30 years time.