Charles Stanley Direct - Where to Start?

ValiantSon

Alistair31 wrote: »

Vanguard Lifestrategy 60 perhaps ?

The OP is looking for a, "low to medium risk" investment. VLS60 is not low to medium risk.

Plus

Every newbie wants low risk investments - until they know what the definitions of low and high risk mean.

Are there any online risk estimator robo-adviser tools around that helps people to quantify their risk tolerance?

scoot65

ValiantSon wrote: »

The OP is looking for a, "low to medium risk" investment. VLS60 is not low to medium risk.

How would you describe VLS60? Would you say VLS60 is 'medium' or more like 'medium to high'

I've recently bought into VLS60 with the impression that it was a 'medium' risk.....

AlanP_2

scoot65 wrote: »

How would you describe VLS60? Would you say VLS60 is 'medium' or more like 'medium to high'

I've recently bought into VLS60 with the impression that it was a 'medium' risk.....

I'd say a bit above medium in a generic sense, although a traditional 60/40 portfolio has performed reasonably well over many years.

It's difficult to quantify - timescale, overall wealth and any "hard deadline" are key factors, you can't just assess the fund in isolation.

A) VLS60 for kid's Uni fees at a fixed point (say 15 years) would be one Risk Level.

VLS60 for kid's Uni fees at a fixed point (say 4 years) would be a very different Risk Level.

C) VLS60 for ongoing retirement use starting in 30 years time (so a ~60 year horizon) would be yet another Risk Level.

If you take A & B and factor in whether an alternative source of cash is an option if VLS60 is down 30% a few months before the child starts Uni then you have yet another pair of Risk Levels.

Add in whether that VLS60 investment is 5, 20, 50, 90% of your "available wealth" and you have yet more Risk Levels in play.

Generic risk level ratings and indicators can be useful in comparing Fund A with Fund B in terms of relative volatility but personal circumstances are the biggest factor on "my real risk level" in my opinion.

Alexland

AlanP wrote: »

Generic risk level ratings and indicators can be useful in comparing Fund A with Fund B in terms of relative volatility but personal circumstances are the biggest factor on "my real risk level" in my opinion.

Totally agree. I would also question if VLS20 and VLS40 are much lower risk as you might have better capital protection from big market drops but with the current bond situation the medium term result seems more likely to be negative.

ValiantSon

scoot65 wrote: »

How would you describe VLS60? Would you say VLS60 is 'medium' or more like 'medium to high'

I've recently bought into VLS60 with the impression that it was a 'medium' risk.....

More like medium-high. The terms are a bit vague, but I tend to see VLS60 as being at the higher end of medium risk, which is why I'd say medium-high. Don't let that put you off your investment decision; just be aware that it will be a little more volatile than some "balanced" funds.

scoot65

AlanP, Alexland and ValiantSon many thanks for your replies. Much appreciated!

BTW would you say that HSBC GS (Balanced) is a similar higher end of medium risk?

ValiantSon

scoot65 wrote: »

AlanP, Alexland and ValiantSon many thanks for your replies. Much appreciated!

BTW would you say that HSBC GS (Balanced) is a similar higher end of medium risk?

Yes. The equities allocation is broadly similar in percentage terms to VLS. They are also more skewed towards corporate bonds, which are riskier than government bonds. As a rough comparison, however, they are fairly comparable as medium-high risk funds.

If you are unsure about investing in funds like these try to consider how long you would hold them for and what your reaction would be to a 30-40% fall in value at a given point in time. If you are holding for decades then they are less risky than only holding for a few years because you could reasonably expect the value to recover and increase beyond the previous high. If a fall in value of that magnitude occurred would you be likely to think it was best to sell up and salvage what you could, or would you be disappointed, but sanguine and stay invested (and even buy more of them to take advantage of the cheap price), knowing that given time they will recover. If you would do the former then they may be too high risk for you; if you would do the latter then they are more in your comfort zone.

Deciding on your risk attitude is not an easy task, but pursuing thought experiments like the above could help you begin to define it.

Alexland

I would agree with the above. I have six figures in HSBC GS Balanced so its one of my core investments. I prefer the slightly higher equities ratio and bias to corporate bonds - 40% government bonds in VLS60 would be more of a concern to me.

I am less worried about seeing drops from market crashes than the bigger risk of seeing long term underperformance caused by bond drag.

Alex

rathernot

Optsdan wrote: »

Thanks very much for a steer.

With funds is it good to hold multiple funds to diversify the risk? Or just hold one at an acceptable risk threshold?

Either is an option, it depends what's in the fund(s).

LifeStrategy has been mentioned and if you want to go passive it's a perfectly good approach as you simply pick your level of equity exposure and they do the rest.

Keep in mind however they have no flexibility to change i.e. if you go into an 80% equity fun it will always be 80% equity as the fund managers have no discretion to do anything different if the markets change.

That's where the whole active/passive thing comes in as one potential benefit of an active investment is that the fund managers have much more discretion over how and what to allocate to if they feel the need.

Be sure to check out the KID documents on any funds or Investment Trusts you're looking at as they'll give you some idea of the level of risk.