Vanguard LifeStrategy 40 for LISA - Good plan?

central

dunstonh wrote: »

Their financials are a concern.

Why do you say this?

aberlyfid_2000

Octagon wrote: »

Hello there,

I would like some opinions/advice please, if you’d be so kind.

I want to put £90 per month in a LISA, for 7 years, as of next month.

This is for the purposes of a shared ownership flat deposit, for which i’ll need about 10K.

I am a busy bee, so I have little time for doing much managing, or the learning required to do the managing.

I don’t want to take lots of risk, as I would like to be settled in my part owned flat by my late 30s, and I won’t be if I take too much risk, and it goes wrong.

I had initially thought Nutmeg, but it would be a big ole admin headache if they go bust (which it looks like isn’t beyond the realms of possibility).

My new thought is a Hargreaves Lansdown LISA, with all my contributions going into Vanguard LifeStrategy Conservative Growth Fund (the 40% equities one).

Is this a decent enough plan? Am I missing anything?

Many thanks!

O.

i think this is a very good idea ! I wouldn't recommend putting the whole 7 years amount in one go, but monthly could work well for you.

dunstonh

central wrote: »

Why do you say this?

Robo-advice is a relatively new area and whilst it is growing, it is not obtaining critical mass quick enough. The margins are very low and the only way to become profitable is to be expensive or get significant assets under management. Research by SCM direct expects most UK robo-advisers will go bust prior to acquiring sufficient assets under management.

Nutmeg has losses that have increased every year since inception. The last accounts showed a 9.3m loss (up from 8.9m the year before). Turnover keeps rising. It went up 0.84m to 2.45m in 2016. However, it is a model that is buying business at high cost. They are rushing to buy assets under management by using cashback style incentives.

They received a £30m injection from backers but their losses are eating that quickly. Their directors recently said they are likely to have to ask their backers for more money or find new backers.

In Dec 2016 they have just £600m under management. It may sound like a big amount but compared to platforms where you are are talking in terms of tens of billions and have only recently turned to profit, you can see that there is a long way to go and how long will those backers keep paying the money.

For context, HL's profits were £265m on assets under management of £79.2bn.

Nutmeg are spending big and are growing quickly but it is a race against time to whether they can find a buyer or get to the point they are profitable before the backers get cold feet and pull the plug.

Octagon

Hello everyone,

I’m very grateful for all your detailed replies.

I am going to go ahead, I think, for a few reasons.

a) Nobody has said ‘terrible fund choice’, or ‘that fund is far too risky for your goals’

b) Psychologically, this plan buys me an element of ‘hope’. There is a chance I can have a proper home (in London), which stops me feeling like ‘what is the point in working hard, since I have no hope of having a home anyway’. This means I will keep working hard!

c) 50/50 chance is better than 0 chance, if I do nothing.

d) Worse case scenario, I will still have a little pot of money for a very nice holiday when i’m 60!

e) This plan is very low maintenance. I don’t want to be faffing about changing providers/funds, etc. as when it is not Xmas holidays, I really don’t have the time to think about it.

From what you have said, I have decided to be much more flexible about the 7 years. I’ll see how it goes (maybe up to as much as 12).

I will also try to put more than £90 in, in the later years.

Thanks so much again!

System

Natural risk taking instinct!

For my wedding fund I have vls20, for my sipp it is vanguard global small cap

But approaching retirement I'll keep any bonds in the (taxed to withdraw) sipp, and equities in the ISA where they can grow freely

Flexibility could afford you higher risk, if you wanted, small caps or vls100 - in for a penny... Or you could have a property fund, so your deposit would generally crash at the same time as the property market, so you'd still be able to buy property with it

Small cap/vls100 if you could stomach a 70% drop with faith that the markets have always historically recovered, usually after a few years - the recovery time seems fairly similar even at different risk levels, just hold!