Vanguard Life Strategy Fund: Good choice?

dutchcloggie

Hello,

I few years ago, I asked a question about investing for utter and total newbies. I then bought a house instead so had no money and decided not to think about investing for a while. But I now have some savings again and I find the growth rate in the savings accounts a bit sad.

I still don't understand investing, bonds, shares, funds, equities etc but I'm wanting to see if I can just park some money somewhere for 10 years and see if it gets me more than the rate on a savings account.

After some research, I found the Vanguard Life Strategy products (https://www.vanguardinvestor.co.uk/what-we-offer/life-strategy-products) and I think I would feel happy to invest my £4000 (I know, a TINY sum) and then £200 per month in the 80% equity fund. I don't understand enough of this whole thing to be able to actively engage in buying/trading/selling etc. so I am hoping I can just invest and forget about it for the next 10 years.

Does this sound like a decent thing to do? I have tried to understand their charges etc but I don't understand them. I realise they charge a fee but I assume that gets taken out from the money I put in the account every month? Or is that extra money they will take from me (so I'd pay £200 + fees every month)?

Thanks for the insights you may be able to share.

ColdIron

Most serious investors don't trade, they buy and hold for the long term. Vanguard's Lifestrategy is a diverse, cheap, buy and forget fund, great for someone like you. Make sure to hold it in an ISA

There are 2 charges. 1) The Ongoing Charge of 0.22% which is taken from within the fund by the mangers so is not apparent to you and 2) an account fee of 0.15% taken from cash in your account or if there is not enough they'll sell some of your holdings. Best to keep some cash on one side for this
https://www.vanguardinvestor.co.uk/what-we-offer/fees-explained

There are other similar funds but at your level there won't be much difference and far from the worst decision you have ever made

BLB53

I like these funds and believe they are one of the best 'buy-and-forget' options. Select a low cost broker such as Vanguard Investor, select the fund which most closely matches your risk profile and appetite for volatility, set up your monthly DD and thats about all there is to it. Check on progress once each year.

Here's a recent update from the DIY Investor site which provides a little more detail on the Lifestrategy 60 option
http://diyinvestoruk.blogspot.co.uk/2018/05/vanguard-lifestrategy-60-year-3-update.html

Wassa123

Vanguard Life Strategy is a good fund. It is very diversified and so you will end up owning very small amounts of thousands of companies. Because it is so diversified, your return will be the average return of all the companies in all markets combined.

I'm not sure how Vanguard collects the fees.

Normally the fees will be invisible for you as the funds fees are reflected in the funds daily changes. Also the dividends payments are more than the fees as well.

I have HL (another broker) set to take the fees out of my non-ISA account rather than the ISA account which is marginally beneficial. Not sure if Vanguard has a similar option.

eskbanker

Wassa123 wrote: »

I'm not sure how Vanguard collects the fees.

Normally the fees will be invisible for you as the funds fees are reflected in the funds daily changes. Also the dividends payments are more than the fees as well.

Fortunately post #2 was from someone who does know how Vanguard collects the fees, and also understands the important difference between (invisible) OCF and (visible) account fees, with appropriate links provided to the relevant source data....

cogito

Wassa123 wrote: »

Vanguard Life Strategy is a good fund. It is very diversified and so you will end up owning very small amounts of thousands of companies.

That's why I would never buy such a fund. You end up owning good, mediocre and poor companies. I'd rather pay a higher fee to a top fund manager such as Nick Train or Terry Smith. But for someone new to investing or doesn't have time to do their own research, an index tracker is OK.

dunstonh

Its great for small investors. We used to use it a lot for them. However, not any more as better alternatives exist. We would not use it for larger investors though as our options for them are better.

eskbanker

dunstonh wrote: »

Its great for small investors. We used to use it a lot for them. However, not any more as better alternatives exist.

Care to share or do we need to cross your palms with silver for that?

Obviously on a "non-binding, without prejudice, subject to status, Ts & Cs apply, E&OE, your mileage may vary" basis, without conducting fact-finding, etc!

I'm aware of other global multi-asset offerings out there such as BlackRock Consensus, L&G Multi-Index and HSBC Global Strategy, and that there are obviously variations between allocations, objectives and methodologies, but would be curious about what's behind your professional opinion of 'better' that means you'd no longer use VLS?

dunstonh

Care to share or do we need to cross your palms with silver for that?

Obviously on a "non-binding, without prejudice, subject to status, Ts & Cs apply, E&OE, your mileage may vary" basis, without conducting fact-finding, etc!

It would not be difficult to work out when you list the similar alternatives and find one with lower charges and better returns.

Lungboy

HSBC Global Strategy Dynamic fits those criteria, although VLS100 beats Dynamic on return but not cost.

MPN

dunstonh wrote: »

It would not be difficult to work out when you list the similar alternatives and find one with lower charges and better returns.

I presume you are indicating the HSBC Global Strategy range?