Novice Vanguard investor

Wentthedaywell?

Forgive the possibly naive question, but I'd appreciate some views, or even to be told I should have already known this before investing!

I've got about £66,000 in a Vanguard 60% Accumulation fund in an ISA that I'm currently transferring to iWeb.

I've paid in about £60,000 over three years. Last December it dropped back down to £60,000, but has more than made up for it currently.

My question is: would it make sense while shares are high to withdraw say 10% and save this in an easy access account and reinvest it once shares are at another low? I'd need to consider the £20,000 pa ISA limits and transaction costs of course

As it is, I feel I'm experiencing the highs and lows of the market but not really capitalising on it if the money's just sitting there.

Albermarle

The usual advice is not to try and time the market as it is nearly impossible to be right on a consistent basis.
Having said that if you were invested in 100% equities , I might also be a bit nervous about putting in another £20K in one go right now. However by being in a 60% fund you are already less vulnerable to stock market drops .
Maybe consider investing the £20K in 3 or 4 lots 3 or 4 months apart , if you are feeling a bit nervous about the markets .

DrSyn

Have an adequate emergency fund set aside. Then just sit back and do nothing until you wish to permanently withdraw from the market.

Masterly inactivity is boring and to some, not as exciting as going constantly in and out of shares. For most people, masterly inactivity is the best strategy.

Trying to time the market as you are attempting to do, is a prime reason why many investors do not get the expected market return!

If I understand your post correctly you have the Vanguard Life Strategy 60% share/ 40% bond fund. This is what I myself would regard as a "buy and forget option".

Below is the approach taken by VLS, I suggest you watch it:-

http://www.kroijer.com/

The following may also be of interest:-

https://www.ifa.com/indexfundsthemovie/

Thrugelmir

Wentthedaywell? wrote: »

As it is, I feel I'm experiencing the highs and lows of the market but not really capitalising on it if the money's just sitting there.

The investments contained with the fund will continue to pay dividends and income. While the value of your invested money will rise and fall. You will own a greater number of underlying investments.

One option is to switch some of your ISA investments into a pension wrapper. You'd at least then then benefit from the available tax relief.

[Deleted User]

DrSyn wrote: »

Have an adequate emergency fund set aside. Then just sit back and do nothing until you wish to permanently withdraw from the market.

Masterly inactivity is boring and to some, not as exciting as going constantly in and out of shares. For most people, masterly inactivity is the best strategy.

Trying to time the market as you are attempting to do, is a prime reason why many investors do not get the expected market return!

If I understand your post correctly you have the Vanguard Life Strategy 60% share/ 40% bond fund. This is what I myself would regard as a "buy and forget option".

Below is the approach taken by VLS, I suggest you watch it:-

http://www.kroijer.com/

The following may also be of interest:-

https://www.ifa.com/indexfundsthemovie/

100% agree with that. I am currently awaiting for Lars Kroijer book, ordered it a few days ago. Knowledge I gained recently about admitting to having "no edge" in the markets was eye opening.

OP, you yourself have named this thread as "Novice Vanguard investor". You must agree that you have no specialisation nor expertise knowledge about the markets. Forget about timing it then! Statistically, you will just make it worse. Enter the markets and forget about it. Especially if you have Vanguard LS 60%, which is "buy and forget", as mentioned above.

Alice_Holt

https://monevator.com/patient-investing-faith/

"Be comfortable in your investment approach, set out an appropriate financial plan, properly allocating your portfolio to various asset classes can help you weather market turbulence."

BTL comments:
"Interesting perspective and reminded me of the Fidelity research that showed their best investors were clients who had sadly passed away and therefore had no option to meddle with their investments…"
"No matter how good your strategy, the fact is the value of your portfolio will go up and down. If you have little or no faith in your approach then you’re very likely to sell out when your portfolio is dropping like a stone. And that, of course, is almost always the worst thing you could do."

Wentthedaywell?

Thanks for all your comments folks, they are appreciated. I'm reassured, as 'buy and forget' is exactly what I want to do.

I hadn't seen that I was asking should I try to beat the market - far beyond my ability - by taking money out/replacing it later. But of course that is what I would have been trying to do.

I suppose I was wondering whether I should be cashing some in when high and using it elsewhere (e.g.holiday, house maintenance) and topping up later when lower. But I'll leave it be and do any spending from other sources.

The next thing to consider is my S&S/cash split. Currently it's about 40/60% and I'm sure I should have more in shares. As a novice it still seems a bit alien after the safety (and terrible returns) of a building society!

badger09

Wentthedaywell? wrote: »

Thanks for all your comments folks, they are appreciated. I'm reassured, as 'buy and forget' is exactly what I want to do.

I hadn't seen that I was asking should I try to beat the market - far beyond my ability - by taking money out/replacing it later. But of course that is what I would have been trying to do.

I suppose I was wondering whether I should be cashing some in when high and using it elsewhere (e.g.holiday, house maintenance) and topping up later when lower. But I'll leave it be and do any spending from other sources.

The next thing to consider is my S&S/cash split. Currently it's about 40/60% and I'm sure I should have more in shares. As a novice it still seems a bit alien after the safety (and terrible returns) of a building society!

That is entirely up to you.

You should have an easily accessible emergency fund sufficient for you to feel comfortable. The amount will depend on many factors, such as your age, commitments (mortgage etc), dependants, security of employment, etc.

You haven't mentioned whether you're a home owner, have adequate pension provision, tax rate etc or given very much info at all.

Albermarle

The next thing to consider is my S&S/cash split. Currently it's about 40/60% and I'm sure I should have more in shares. As a novice it still seems a bit alien after the safety (and terrible returns) of a building society!

All other things being equal ( and as already said we do not know your full situation ) then you will most likely lose out long term by having too much cash not invested.
I was the same when younger , approaching S& S just a bit too cautiously . Now near retirement my cash % is lower than it has ever been as I have become more confident about investing.
On the other hand it is still in the 25 % region , as a safety cushion. In the end you you have to do what you feel comfortable with .

Wentthedaywell?

I'm recently retired, though work a bit part-time, mortgage-free, have a DB index-linked pension which I can live on and will get my state pension in another 4 years.

I know I have too much in cash, but feel I may need/want to spend - a new car, a big holidays while I'm "young' enough/able to enjoy such things.

As I'm writing this I can see how illogical my approach is, especially at a time of such low interest rates for savings accounts. I need to be a little bolder and start shifting the balance.

poppy10_2

If you've already retired the last thing you should be doing is shifting more investments into equities. Stick to what you have