Why doesn't everyone just buy Vanguard LifeStrategy?

Apodemus

Type_45 wrote: »

- This study by the Institite of Fiscal Studies says that 40% of London's salary is taken up by rent: http://uk.businessinsider.com/generation-rent-londoners-spend-40-of-income-on-rent-says-ifs-2017-10

The IFS study actually says that of the roughly 50% of Londoners who rent, the average rental forms 40% of their salary before Housing Benefit is taken into account. The report argues that for the lowest income portion of London’s population, where rental after Housing Benefit is 36%, this is unsustainable and has worsened greatly in recent years.

This is very different from saying that “40% of London’s salary is taken up by rent”.

chiang_mai

Because markets crash, so unless you take your profit you will at some point lose:

https://en.wikipedia.org/wiki/List_of_stock_market_crashes_and_bear_markets

chucknorris

Linton wrote: »

Even under current circumstances, the risk in holding gilts and similar very safe bonds isn’t quite as high as you imply. If you buy bonds directly and hold to maturity the net result in general should be a very small profit matching prevailing interest rates, the drop in capital value being offset by reinvested interest, This is the calculation that determines the price of the bond.

Thanks, I'm aware of that, and that was the type of bond investment that I was thinking of when I started this thread:

https://forums.moneysavingexpert.com/discussion/5727472

It isn't the capital risk, it is the (net) income below inflation that puts me off. I may change my view a bit later on in life when I might feel the need to reduce the equities that I hold.

ColdIron

No shortage of higher yielding bonds out there, but you sacrifice protection. It's the traditional risk/reward balance

Apodemus

chiang_mai wrote: »

Because markets crash, so unless you take your profit you will at some point lose:

https://en.wikipedia.org/wiki/List_of_stock_market_crashes_and_bear_markets

But you said holding 100% equities “forever” was guaranteed to lose money over time. The portfolio value will rise & fall and fall & rise, but if I hold it “forever”, it’s not “guaranteed to lose”.

I have equities that I have held through at least 17 of the “crashes” on your list and i’ve not lost a penny on them yet!

chiang_mai

Apodemus wrote: »

I don’t understand. Why would holding 100% equities forever be guaranteed to lose money over time?

Apodemus wrote: »

But you said holding 100% equities “forever” was guaranteed to lose money over time. The portfolio value will rise & fall and fall & rise, but if I hold it “forever”, it’s not “guaranteed to lose”.

I have equities that I have held through at least 17 of the “crashes” on your list and i’ve not lost a penny on them yet!

"yet"...and neither have you made any money either except on paper! So be sure and cash them sometime soon otherwise there could be a another market crash or even worse you could die, you'll loose money either way!

Apodemus

chiang_mai wrote: »

"yet"...and neither have you made any money either except on paper! So be sure and cash them sometime soon otherwise there could be a another market crash or even worse you could die, you'll loose money either way!

You still don’t get it. You said it’s guaranteed to lose value if held forever. It’s not. There may be a paper loss at times, a paper gain at others, neither is guaranteed.

But all the while I’ve had an income stream that’s grown over time and is in excess of what I would have had from the initial cash value placed in a bank, so I have indeed made money and I am more than happy!

IanSt

chiang_mai wrote: »

"yet"...and neither have you made any money either except on paper! So be sure and cash them sometime soon otherwise there could be a another market crash or even worse you could die, you'll loose money either way!

So where do they then put their money? Into Bonds with the almost 100% guarantee that they will also lose money once interest rates start to increase? I certainly wouldn't. I agree with Apodemus and will be keeping my equity investments fully invested.

chucknorris

ColdIron wrote: »

No shortage of higher yielding bonds out there, but you sacrifice protection. It's the traditional risk/reward balance

I know, and that's why I don't want to invest, I 'd rather have my money in Vhyl, but when the time comes I will have a look around and see what is available.

brasso

chiang_mai wrote: »

"yet"...and neither have you made any money either except on paper! So be sure and cash them sometime soon otherwise there could be a another market crash or even worse you could die, you'll loose money either way!

I thought you said you had 100k invested in funds? Aren't any of these equities?

With dividends reinvested you're not likely to lose money over time.