Vanguard life strategy - return

Linton

sixpence. wrote: »

Also, what would be the strategy with Vanguard over a lifetime? Are you supposed to own the 20 in your twenties and thirties and then switch to the 40/60 in your forties and so on? Would you end up selling your current fund and buying another to re balance?

You are not expected to do anything in particular. However your suggested strategy is the wrong way round. When investing in the very long term such as pensions it makes more sense for people in the 20s and 30s to go for a high % in equities, perhaps 100%. The reason is that over the long term short term variation doesnt matter and in fact major falls in price can be a great benefit to the drip-feeder. since you get more shares for your money. As you get older the drip feeds become a much smaller part of your portfolio and you may well be more focussed on not losing the gains of the previous 30 or more years.

sixpence.

Sorry I meant it that way around. I think my brain has turned to mush.

So one way of not loosing those gains would be to sell the 100% equity Vanguard and replace it with a 40% equity in later life? Would there be any other ways of making that transition from a more volatile portfolio to a lower risk one? I'm thinking you'd have to time it well.

Alexland

Vanguard Target Retirement funds will do the gradual risk reduction automatically for you however the fee is 0.02% higher than VLS and most importantly they will profile you on the assumption that at the target date you would withdraw and buy an annuity.

If you intend to go into drawdown then you could probably take a bit more risk both leading up to and during your retirement. Some people on this forum have profiled themselves into a VLS60 drawdown situation.

I agree with ColdIron that good investing is often dull.

Although we debate the relative proportions of multi index funds such as VLS, HSBC Global Strategy and L&G MI they are all pretty good and likely to deliver healthy long term growth if you can handle the volatility without making behavioural errors.

Alex.

eskbanker

sixpence. wrote: »

Wouldn't that be a risk as Vanguard could tank? Isn't that a lack of diversification because it's just one fund?

The whole point of the Vanguard LifeStrategy range is that they're funds of funds which are inherently diversified already, thereby being considerably less prone to tank than the other investments you appear to be considering or are already holding.

sixpence.

Yes but it is still run by a single body, that's what I meant. If there was an issue with Vanguard itself, I'd be in trouble.

Okay, so what I'm getting from this is that most people would just put all of the 26K in a vanguard?

firestone

sixpence. wrote: »

Yes but it is still run by a single body, that's what I meant. If there was an issue with Vanguard itself, I'd be in trouble.

Okay, so what I'm getting from this is that most people would just put all of the 26K in a vanguard?

While i would not put all my money in that one fund i dont think you will have a problem with Vanguard the company due to its size and in that if they have problems the others would be hit just as bad if not more i would guess

jamei305

If Vanguard "tanks" then some other company would acquire the rights to administer the shareholdings in the the thousands of companies that constitute Vanguard's fund products. You might not be able to sell all your investments until the process is sorted out, but you shouldn't lose your money unless there is some massive fraud and Vanguard only pretended to invest customers' money but in actual fact spent it all on the greyhounds and managed to cover it up.

badger09

sixpence. wrote: »

.......... It seems like the more I know the more I don't know with this stuff.

dunstonh wrote: »

Well done. That is an important step in your understanding.

Looks like you're progressing from the pink to the yellow section:T

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

capital0ne

catoutthebag wrote: »

Hi I opened my vls 60 via Charles Stanley direct 2 and a half years ago with 1000 pounds. It's up about 25% since with dividends reinvested.

Would you this be considered a good return, so far?

Have you compared VLS60 with others? Loads of web sites let you do this, for example:
http://commshare.com/researchandtools/fundcentre.aspx

foreversummer

Hope you don't mind me jumping in here as a novice. I have Vanguard LS and I notice that they are weighed towards the US. This bothers me slightly because of Trump.

Would Vanguard change the asset allocation if they though fit? Or would we just go down with the Americans if they have another crash? I've read today that Japan could be a better risk than US. Do we need to even worry about these things if we have Vanguard LS I guess is what I am asking.

Foreversummer