Vanguard Target Retirement 2055 Fund

dunstonh

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

The average UK consumer is generally cautious. Their risk profile will change very little over their life. Typically reducing one notch in retirement.

So, how does the target fund actually fit that? It starts with an equity content which is higher than the typical risk profile and ends with an equity content that is lower than the typical risk profile. If you know now that your personal risk profile and capacity for loss is going to fit that risk reduction over the next 50 years then fair enough. However, how many people can know that?

For those that want to stick with Vanguard, they could go with VLS and then personally adjust between the VLS versions over time should they feel their risk profile and capacity for loss has changed. Not when Vanguard tell you that it has.

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!).

If you are deciding to go DIY then do your research and draw your own conclusions but do not be close minded and do not ignore the negatives of potential solutions just because you worship at the temple of Vanguard.

bostonerimus

coyrls wrote: »

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.

No one time fund purchase is going to work over a 30 year duration. Evan a passive indexer will rebalance and might have a situation where they want to have more cash on hand and they might want to buy a REIT etc. A portfolio should be regularly monitored....you don't necessarily have to do anything, just look at it to monitor growth and make sure it is safe an tucked up all nice and warm. This is where DIY is good as you aren't paying an annual fee to someone to do some pretty simple things.

bostonerimus

Linton wrote: »

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.

I mostly agree, but basic investing is pretty simple (hat's what people should stick to) and is often made to sound more difficult than it is. If you can avoid the big pitfalls of high fees and lack of diversity then you will do ok.

bostonerimus

dunstonh wrote: »

T

For those that want to stick with Vanguard, they could go with VLS and then personally adjust between the VLS versions over time should they feel their risk profile and capacity for loss has changed. Not when Vanguard tell you that it has.

If you are deciding to go DIY then do your research and draw your own conclusions but do not be close minded and do not ignore the negatives of potential solutions just because you worship at the temple of Vanguard.

Vanguard is set up for DIY. They won't try to sell you stuff and if you go over to https://www.bogleheads.org you'll have an interesting time. Vanguard has a large enough range of funds for someone to design a portfolio and by sticking to their funds you eliminate all the noise and distractions of other funds......you could do that with other fund companies too. As my portfolio is basically 3 Vanguard Index funds it's cheap and easy to manage.

dunstonh

Vanguard is set up for DIY.

You better tell Vanguard that as it does not appear to match their approach in the UK which has been heavy in adviser distribution.

They also have a sales support team that visits IFAs up and down the country. Like most fund houses, they are multi-distribution.

They won't try to sell you stuff

So, what do you call setting up an in-house platform that automatically creates a bias towards their own product as it does not allow other fund houses?

As my portfolio is basically 3 Vanguard Index funds it's cheap and easy to manage.

Your bias towards Vanguard is noted. However, this thread is not about them as a company. It is about a particular fund style they offer

BLB53

So, what do you call setting up an in-house platform that automatically creates a bias towards their own product as it does not allow other fund houses?

Surely that is not selling you stuff...just providing another v low cost platform for those who choose to just hold Vanguard funds.

TheTracker

dunstonh wrote: »

Your bias towards Vanguard is noted.

Now that's the pot calling the kettle black.

dunstonh

TheTracker wrote: »

Now that's the pot calling the kettle black.

I have no bias towards Vanguard. I use them where I feel it is appropriate.

Zola.

To summarise, she hasnt gone for the target retirement. Plan for now is she's going to bump her own pension up in work and has opened a S&S ISA and pumped a little money into VLS 100 for now.

dunstonh wrote: »

For those that want to stick with Vanguard, they could go with VLS and then personally adjust between the VLS versions over time should they feel their risk profile and capacity for loss has changed. Not when Vanguard tell you that it has.
.

By that do you mean selling units in for example VLS 100 that have been building over 20 years and converting them to VLS 40 (for example)

Or do you mean gradually cutting off funds into 100 and adding to 80, 60, 40 over time?

dunstonh

By that do you mean selling units in for example VLS 100 that have been building over 20 years and converting them to VLS 40 (for example)

Yes, if the scenario sees the person having such an extreme change in position on their risk profile. That level of difference would be rare as you are talking about around 5 notches on a 1-10 scale. That would be highly unusual.

Or do you mean gradually cutting off funds into 100 and adding to 80, 60, 40 over time?

That would be more typical but again, the scale of drop is more than normal.

More typical is someone using VLS60 dropping to VLS40. Or 80 to 60.

If you have invested for 20-30 years as a DIY investor, you would have gone through many stockmarket crashes and come out the other end. Your knowledge of the investments will be better. You will know how it works. So, why would you want to drop so many risk levels? There could be reasons but most would only shuffle down a little.