IFA or Vanguard LifeStrategy fund

apollo9

I have a sizeable amount of money put away from ISA over the last 30 years. I am in my mid fifties and want to consolidate the whole lot. When I say sizeable its about £170k and represents my pension.


Its held it all sorts of different funds with no strategy or overall thought. Laziness and lack of knowledge are the two main culprits. While the portfolio is worldwide its mainly all active funds and I know I should get more bonds etc.


Is there a good reason why I should not just phase the money in over the next year or so into the Vanguard 20% Equity or even the 40%, or a mix thereof?


I realise the risk is that is all in one pot and I realise my gains may not be as good as an active fund but I am more concerned with capital preservation with some mild upside hence the low to medium equity split.


In terms of when I wish to retire its about 10 years, so in about 5 years I would expect to move it again to a lower equity ratio.


Any advice appreciated or should I just see a good Ifa- is there one?


thanks

HappyHarry

apollo9 wrote: »

I have a sizeable amount of money put away from ISA over the last 30 years. I am in my mid fifties and want to consolidate the whole lot. When I say sizeable its about £170k and represents my pension.

Why is it not actually in a pension? You may missed out on a lot of tax relief so far which may have been an expensive error.

apollo9 wrote: »

Its held it all sorts of different funds with no strategy or overall thought. Laziness and lack of knowledge are the two main culprits. While the portfolio is worldwide its mainly all active funds and I know I should get more bonds etc.

That's refreshingly honest. Understanding your attitude to risk is probably a key thing you should do, then look to match your investment strategy to it.

apollo9 wrote: »

Is there a good reason why I should not just phase the money in over the next year or so into the Vanguard 20% Equity or even the 40%, or a mix thereof?

Again, understanding your risk profile is key. Once you know this then you can adopt an investment strategy to suit you, which could be passive or active. Why would you not move all your funds into your preferred strategy at once? I can understand drip-feeding in if your portfolio is currently cash, but you are already holding a diverse portfolio by the sounds of it.

apollo9 wrote: »

I realise the risk is that is all in one pot and I realise my gains may not be as good as an active fund but I am more concerned with capital preservation with some mild upside hence the low to medium equity split.

One pot, providing it is itself diversified, is not too much of a risk.

There is always an ongoing discussion about whether a cheap passive fund is better than an expensive active fund. Don't necessarily assume that an active fund is better, or higher risk, than a passive. There are plenty of good passive and active funds out there at varying risk levels.

apollo9 wrote: »

In terms of when I wish to retire its about 10 years, so in about 5 years I would expect to move it again to a lower equity ratio.

This makes sense if you are going to purchase an annuity, but if you are moving to drawdown where the funds might need to last you another 30 years, you should consider whether lowering the risk 5 years before retirement is really suitable.

apollo9 wrote: »

Any advice appreciated or should I just see a good Ifa- is there one?

If you have little knowledge, seeing an IFA might be a good thing to so. You would get a suitable portfolio aligned to your attitude to risk, and plenty of advice as to which products to invest in.

Are there any good IFAs? Yes, the vast majority of IFAs are good. They wouldn't be in business very long if they weren't.

apollo9

Thanks, yeah the pension think I know, but that has shipped has now sailed. I guess I was/am too nervous about not having the cash to hand when and if I need it

HappyHarry

apollo9 wrote: »

Thanks, yeah the pension think I know, but that has shipped has now sailed. I guess I was/am too nervous about not having the cash to hand when and if I need it

Not necessarily. There maybe another slower ship still to depart.

i.e. If you currently have earned income, you could move some ISA funds into a pension each year and get tax relief. However, there is a lot to consider if you were to do this though. This might be a time to use an IFA.

Pensions can be accessed from age 55, so that bit shouldn't be too much of an obstacle for you now.

jimjames

apollo9 wrote: »

Is there a good reason why I should not just phase the money in over the next year or so into the Vanguard 20% Equity or even the 40%, or a mix thereof?

If the money is already invested then I can't see any reason to phase it, surely you'd just want to move to your desired position asap.

Audaxer

apollo9 wrote: »

I have a sizeable amount of money put away from ISA over the last 30 years. I am in my mid fifties and want to consolidate the whole lot. When I say sizeable its about £170k and represents my pension.

Its held it all sorts of different funds with no strategy or overall thought. Laziness and lack of knowledge are the two main culprits. While the portfolio is worldwide its mainly all active funds and I know I should get more bonds etc.

Is there a good reason why I should not just phase the money in over the next year or so into the Vanguard 20% Equity or even the 40%, or a mix thereof?


I realise the risk is that is all in one pot and I realise my gains may not be as good as an active fund but I am more concerned with capital preservation with some mild upside hence the low to medium equity split.


In terms of when I wish to retire its about 10 years, so in about 5 years I would expect to move it again to a lower equity ratio.


Any advice appreciated or should I just see a good Ifa- is there one?


thanks

If the £170k represents your pension I would have thought you would need a better return that you can get from a VLS20 or VLS40.

I'm in my late 50s, retired and I recently invested in a VLS40 and VLS60 as well as an approximately 60/40 equity/bond income portfolio of active funds. While I like VLS I'm reluctant to put all my eggs in the one basket, and as I've still got some further lump sums to invest as Cash ISAs mature, I'm thinking of putting some in the HSBC Global Strategy Balanced fund which also a global diversified low cost passive fund.

I've also got it all in ISAs at present, but thinking of opening a SIPP as I can see the tax advantages of doing so even at my age. If you are still working I believe that you can invest up to the amount of your annual salary (up to a max of £40k) less any other pension contributions you may have, into a SIPP, so I don't think it is too late for you to look into the possibility of opening a SIPP.

apollo9

Thanks I think I will phase some into a pension. Thankfully I now also have an occupational pension.

However I do wonder how long the markets will continue to rise and hence my thoughts of putting it out of the active funds into something more balanced. To be frank I think I have been lazy and jumped on bandwagons without really thinking.

Sorry, but are you saying I should do the lump sum, because by phasing over the years I have already done the phasing bit?

My apprehension is buying at the top end of the US/UK indices with our lower valued sterling. Also on the one of the house buying threads someone had said they had cashed out.

Most of my exposure is in the UK/ Euro market.

I had a look at the HSBC fund and that seemed reasonable but I did not think it had done as well as the VLS ones.

apollo9

Ps I will still have to pick some funds for the SIPP I guess and want something more balanced than the specific stuff I had.

Audaxer

apollo9 wrote: »

However I do wonder how long the markets will continue to rise and hence my thoughts of putting it out of the active funds into something more balanced.

Nothing wrong with considering balanced global diversified passive funds, but just because a portfolio consists of active funds does not mean it is not balanced.

Sorry, but are you saying I should do the lump sum, because by phasing over the years I have already done the phasing bit?

My apprehension is buying at the top end of the US/UK indices with our lower valued sterling. Also on the one of the house buying threads someone had said they had cashed out.

People say you shouldn't try to time the market, but like you I'm reluctant to be fully invested at this time in case of an equity crash in the near future.

I had a look at the HSBC fund and that seemed reasonable but I did not think it had done as well as the VLS ones.

From what I could see the HSBC and VLS funds with roughly the same equity/bond mixes have had roughly the same performance over the past 5 years. I don't know whether or not HSBC would do better in a falling market as its allocations are managed.

Alexland

Frankly we don't know if it would be better to invest it in VLS/VTR, HSBC, Blackrock or L&G multi asset funds. They are all similar products.

We could debate the virtues of home bias and tiny fee differences but it's more important you decide your % equity exposure and if you want to reduce it further in the lead up to retirement.

This often depends on if you intend to buy an annuity (where the value at the start of retirement really matters) or go into draw down (where you may wish to take more risk as more will be invested longer).

Regardless of investment strategy it's worth looking at the various advantages and disadvantages of moving the money gradually into a pension.

Alex

bostonerimus

I think you should reconsider your equity percentages....a big risk is not seeing enough capital appreciation through the maybe 30 or 40 years of retirement to keep up with inflation. Historically a 60/40 equity to fixed income ratio has been a good balance between risk and return.

Without knowing a little more about your other finances and income needs it's hard to comment further, but not impossible for the folks that like the sound of their own voice.....so here goes. Assuming you are in your mid 50s I think something like VLS60 will be a good choice for an easy no fuss "portfolio". Maybe as you get a bit older you might want to slowly transition to some more fixed income, but right now don't go too light on the equites.