Novice Investor seeking advice

bigadaj

sofa_searcher wrote: »

Somehow i missed that. In that case just a lifestrategy fund should suffice.

The decision now is whether to stick with 80% or 100% equity?
If i go the 100% route, is it then worth getting a fixed income fund for diversification?

Your decision whether to go 80 or 100, it's largely personal choice.

Going 100 with a fixed income fund would be illogical, you'd end up similar to an 80 fund in all probability but then have the hassle of rebalancing.

ColdIron

sofa_searcher wrote: »

If i go the 100% route, is it then worth getting a fixed income fund for diversification?

Do you mean something like the Vanguard LifeStrategy 80?

A_T

The global bond market is much bigger than that of global equities. if you're investing in securities I don't know why anyone would want to ignore it.

dividendhero

A_T wrote: »

The global bond market is much bigger than that of global equities. if you're investing in securities I don't know why anyone would want to ignore it.

That may well be true, but as long term investments they suck - I don't have a penny in bonds myself...

sofa_searcher

ColdIron wrote: »

Do you mean something like the Vanguard LifeStrategy 80?

What i meant was either going with LifeStrategy 80 or LifeStrategy 100.

LifeStrategy 100 is all equity hence my thought of investing in fixed income fund or etf

bigadaj

sofa_searcher wrote: »

What i meant was either going with LifeStrategy 80 or LifeStrategy 100.

LifeStrategy 100 is all equity hence my thought of investing in fixed income fund or etf

You seem to have missed the irony.

ColdIron

Arguably borderline sarcasm. OP read bigadaj's post #12 and ask what you are trying to achieve

The important difference between the VLS 100 and the VLS 80 is that the latter already has 20% in fixed interest mostly through Vanguard's Global Bond tracker. This has about 9,000 investment grade and government bonds from around the world so it's pretty diversified in good quality securities. Now there is an argument that bond trackers are not the best way to get fixed interest exposure but when you are starting out at £120 a month it won't make any difference at this stage

You would be well served by reading, at the least, the Key Investor Information Document and Factsheet of a fund before investing in it

On the positive side you really only have 1 decision to make instead of 2. Do some research into the difference between equities and bonds/fixed interest and you should arrive at an answer you are happy with. You'll get plenty of help here on anything you're not sure about, even some 'ironic' ones

sofa_searcher

Just a quick update, I eventually went with lifestrategy 100 using vanguards own platform

Somyadhawan

This plan seems really good offering great opportunity for investments

Bravepants

The aim of including bond funds in a portfolio is to act as a damper in times of equity volatility. The VLS funds are re-balanced every year automatically. If equities fall, bonds tend to fall less, this changes the balance of your portfolio...greater bond value than equity value, so the re-balancing will sell some of the bond fund to buy the cheaper equities. Bonus!


On the other hand if equities go up, increasing the proportion compared to bonds, some equities are sold to then stash them "safely" in the bond damper.


In another thread someone posted a link to a US article about the 4% rule. it is interesting reading.


It is shown there that even after lifetime of investing in a 60/40 equity/bond split (e.g. VLS60), the 4% safe withdrawal rule will still hold true. That is there is enough growth potential in such an equity/bind mix that a pot drawn at 4% per year should last a 30 year retirement.