Switching between VLS funds?

Roland_Flagg

I've just started transferring £1k a month into a VLS60 fund on Vanguard's own platform.

My thoughts are that as I won't need to access this fund for 10-13 years, that even though we could be going through a market downturn, it is best just to leave it as it is and ride out the dips.

But I thought I would just ask for opinions on whether it is wise, or even possible, to shift the money into a VLS20 in downturns, and then switch it back into the VLS60 when the market picks up?
Or is there no point in doing this?

webjaved

It depends on your risk tolerance, how risky are you feeling?

If it was me I would just leave the money in there and let it ride it out, you can't time the market. Investing is for the long term, there will be dips, there will be sharp rises, moving it to VLS20 and then back again just doesn't make any sense at all. I'd leave it there and just check your investments once or twice a month.

Linton

So you would prefer to delay buying VLS60 until it is more expensive? Does this make sense?

Tom99

Only if you know in advance when a downturn/pick-up is to start and and finish.

Alexland

I work on the principle that I want most of my money in the highest growth assets for most of the time.

So I only ever shift a limited proportion between asset classes when I can buy at better value. This means shifting more into equities when the stock market starts dropping and more into bonds when the stock market is looking too exuberant. Remember that when share prices are down those reinvested dividends are buying better value which will eventually take you ahead of your previous position.

You are diversified and have 10+ years ahead so don't take actions that crystalise losses.

You should get a good result sticking to VLS60.

Alex

Malthusian

It is market timing. There is no point in doing it because if you are able to make money by predicting when the market will go up and down in advance of the market, you should stop playing around with your savings and open a hedge fund.

If you are transferring £1,000 a month into Vanguard then you should be willing the global market to crash so you get shares cheaper. People who are currently accumulating into stockmarket funds should be putting on funny masks and doing rain dances to petition the gods to bring stockmarket crashes and make them as big and hard as possible (providing it doesn't affect their job security), not worrying about them.

redpete

At best you are considering buying fewer equities when they are cheaper, at worst you are considering buying them when they are expensive and then selling them when they are cheaper.

nrsql

Another option would be to change the drip feed to the VLS20 so you have both funds and you are less worried about the new investments.
Means you get some which will be targeted at longer term / higher risk and some at a downturn.

Bravepants

nrsql wrote: »

Another option would be to change the drip feed to the VLS20 so you have both funds and you are less worried about the new investments.
Means you get some which will be targeted at longer term / higher risk and some at a downturn.

But if you have equal amounts in VLS60 and VLS20 then you may as well have just bought VLS40.



VLS60 is about the average ratio of equities and bonds that is tolerable to the average UK investor. It should be sufficiently robust to downturns itself. Plus, as others have said, with a 10 to 13 year timeframe you actually WANT a downturn sooner rather than later.

Audaxer

There is no point in moving your VLS60 investment into a VLS20 in a market dip, as you will probably miss most of the gains when markets recover.

In market dips you will also benefit from keeping investing in the VLS60 as you will be buying units at cheaper prices.

tel_

Doesn't it make a little more sense for Roland to reduce his contributions to, say, £500 during periods of growth?

My Vanguard LS investments are currently at +15%. I'm thinking of reducing mine to £500 because of this, as I also pay1k into my investments. Then I will increase those contributions back to 1k when the markets are down. Isn't this wise?

I suppose the only negative side to this that I can see, is the longer you leave contributing, the longer you will have to leave your funds alone before accessing them.

When I first started my VLS funds nearly a year ago, VLS funds were underperforming, so pouring 1k a month into them was a very wise decision. This wasn't from my huge knowledge & experience in funds I have to add, I don't have any! but from the good people of these forums - Alexland, coleston etc. Thanks guys!!