Vanguard advice

louloubelle79

Hello
New to investing and reading lots to understand as best as I can. Looking at saving monthly into a S&S ISA. Looking at life strategy and target retirement funds. Retirement fund 2045 vs Lifestrategy 60% fund. Any advice pls? Money to be used possibly for early retirement or helping children out.

bostonerimus

The Target Retirement fund will slowly change it's asset allocation as you get older, the VLS funds have a constant asset allocation. Either is a sensible way to invest for the novice. However, why are you looking at Target 2045; it has 80% equities and VLS60 has 60%? why the difference? There are good reasons to own high percentages of equities, but given your age you might have considered Target 2035.

cloud_dog

louloubelle79 wrote: »

Hello
New to investing and reading lots to understand as best as I can. Looking at saving monthly into a S&S ISA. Looking at life strategy and target retirement funds. Retirement fund 2045 vs Lifestrategy 60% fund. Any advice pls? Money to be used possibly for early retirement or helping children out.

From this post we do not know your age / age of your children but you may find that those two objectives are in conflict with each other, i.e. pension money can only be accessed at 55 (possibly going to 57 in the near future).

ColdIron

Lifestyling products such as the Target Retirement funds are a bit old fashioned for many now. They were good for reducing volatility as you approached your retirement date so that you could purchase an annuity but many people will now choose drawdown. Unless you plan to purchase an annuity at a target date in the future I would avoid them, Oddly Vanguard introduced this range of products just as most were withdrawing from them

ValiantSon

I'd agree with bostonerimus, the Target 2045 fund seems an odd choice for your age, if you are considering early retirement. It fits your NPA, but for early retirement you probably would be better with Target 2035.

As to whether to choose LifeStrategy or Target Retirement funds, I'd personally go for the LifeStrategy, if only for the slightly cheaper cost at 0.22% compared to 0.24%. However, that shouldn't necessarily be the overriding concern. Currently, Target 2035 has a 72% equity allocation, so it is currently more aggressive than VLS60. This should, in theory, give you better returns at present, albeit with some increased volatility and risk.

70% equities may be a reasonable option for the next 10 years, if you are prepared for the higher volatility compared to 60%. You could achieve this, however, by putting half the money into VLS60 and half into VLS80. That would give you a 70% equities portfolio at the lower cost. You would then have the choice to reduce your risk at an opportune time, rather than on Vanguard's set timescale (when you have good growth in the VLS80, and are that bit closer to retirement, e.g. 10 years from now) by selling the VLS80 and using the proceeds to purchase more VLS60.

louloubelle79

Thankyou For all your help

ValiantSon

cloud_dog wrote: »

From this post we do not know your age / age of your children but you may find that those two objectives are in conflict with each other, i.e. pension money can only be accessed at 55 (possibly going to 57 in the near future).

The OP is either 38 or 39. Her age is indicated in her signature.

She is investing through an ISA, so pensionable age is irrelevant, and FWIW her early retirement age will be 57.

bostonerimus

ColdIron wrote: »

Lifestyling products such as the Target Retirement funds are a bit old fashioned for many now. They were good for reducing volatility as you approached your retirement date so that you could purchase an annuity but many people will now choose drawdown. Unless you plan to purchase an annuity at a target date in the future I would avoid them, Oddly Vanguard introduced this range of products just as most were withdrawing from them

The roughly 50/50 asset allocation of the 2015 and 2020 Vanguard Target funds are just fine for a prudent drawdown strategy

cloud_dog

ValiantSon wrote: »

The OP is either 38 or 39. Her age is indicated in her signature.

She is investing through an ISA, so pensionable age is irrelevant....

Ok but, I still believe the two separate focus are sufficiently distinct as to not aid the OP in the investment decision, i.e. which fund(s) etc. It would make sense to separate out the 'retirement' investment from the 'help the kids' investment by fund or accounts. Or, simply ignore the 'help the kids out' for the purpose of investing.

ValiantSon wrote: »

...and FWIW her early retirement age will be 57.

Interesting. I wasn't aware that that proposal had been passed? In fact if the OP is 39 then their retirement age (based on the proposals and accepting that nothing has been written in to law yet, and at this point in time there isn't a published schedule to do so), would be 68.

ValiantSon

cloud_dog wrote: »

Ok but, I still believe the two separate focus are sufficiently distinct as to not aid the OP in the investment decision, i.e. which fund(s) etc. It would make sense to separate out the 'retirement' investment from the 'help the kids' investment by fund or accounts. Or, simply ignore the 'help the kids out' for the purpose of investing.

Perhaps. I think the early retirement is probably the main focus, but the OP can enlighten us.

cloud_dog wrote: »

Interesting. I wasn't aware that that proposal had been passed? In fact if the OP is 39 then their retirement age (based on the proposals and accepting that nothing has been written in to law yet, and at this point in time there isn't a published schedule to do so), would be 68.

Okay, technically the law hasn't changed, but it is simply waiting for final parliamentary approval. It will receive approval because parliament has consistently demonstrated that it it is not averse to these changes.

I said that her early retirement age would be 57. Her NPA would be 68, but I hadn't commented on that.

cloud_dog

ValiantSon wrote: »

I said that her early retirement age would be 57. Her NPA would be 68, but I hadn't commented on that.

I know I am being pedantic but, assuming all these changes come in to effect then it is my understanding that they will keep the personal pension retirement age in line with the SPA minus 10 years?